Impact of Information Technology on Management Efficiency (A Case Study of Pakistani Firms)

Impact of Information Technology on Management Efficiency (A Case Study Of Pakistani Firms)

THESIS SUBMITTED TO THE INSTITUTE OF MANAGEMENT SCIENCES, BAHAUDDIN ZAKARIYA UNIVERISITY, MULTAN PAKISTAN IN FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN BUSINESS ADMINISTRATION

Muhammad Shaukat

Institute of Management Sciences Bahauddin Zakariya University, Multan(Pakistan) 2009

Impact of Information Technology on Management Efficiency (A Case Study Of Pakistani Firms)

MUHAMMAD SHAUKAT

Ph.D.

Institute of Management Sciences Bahauddin Zakariya University, Multan(Pakistan) 2009

Certificate of Supervisor

It is certified that Mr. Muhammad Shaukat s/o Malik Imam Bakhsh has carried out research on the topic entitled “Impact of Information Technology on Management Efficiency: A Case Study Of Pakistani Firms” under my supervision.

His research work is original and distinct and his dissertation is worth of presentation to Bahuddin Zakariya University, Multan for the award of Ph. D. Degree in Business Administration. It is also to certify that he has incorporated all the changes/corrections/ suggestions in his thesis as pointed out by foreign referees in his previously submitted thesis dated 21.12.2006, and desired by Advanced Studies and Research Board of Bahauddin Zakariya University Multan, in its meeting held on 9th October, 2008. It is further to certify that he has also incorporated all those changes/corrections/suggestions in the format and otherwise in his thesis as desired by the local examiner in his evaluation and viva/defense reports to my entire satisfaction.

His research work is now approved for submission and award of Ph.D degree in Business Administration.

Prof. Dr. Muhammad Zafarullah 24/11/2009 Supervisor

Declaration

I, Muhammad Shaukat s/o Malik Imam Bakhsh hereby declare that I have carried out research titled “The Impact of Information Technology on Management Efficiency: A Case Study Of Pakistani Firms” under the supervision of Professor Dr. Muhammad Zafarullah for award of Ph.D. in Business Administration. I further solemnly declare that according to my knowledge and belief, no research work pertaining to this topic has ever been submitted in this university or in any other university.

I also hereby declare that before the present study, I have neither submitted any work pertaining to this topic in this university or in any other university for any degree. I have incorporated all the changes/corrections/suggestions in this thesis as pointed out by foreign referees in my previously submitted thesis dated 21.12.2006, and desired by Advanced Studies and Research Board of Bahauddin Zakariya University Multan in its meeting held on 9th October, 2008. Moreover, I have also incorporated all those changes/corrections/suggestions in the format and otherwise in my thesis as desired by the local examiner in his evaluation and viva/defense reports.

Muhammad Shaukat 24/ 11 /2009 (Candidate)

Chapter 1 Introduction

Chapter 2 Information Technology Concepts Development And Impact on Management

Chapter 3 Information Technology In Pakistan

Chapter 4 Factor Affecting Information Technology Adoption

Chapter 5 Research Model

Chapter 6 Research Methodology

Chapter 7 Data Analysis And Interpretation

Chapter 8 Findings, Conclusions And Recommendations

Annexures Abstract

Technology is seminal to the progress of any country. It helps to catalyze efficiency in the provision of better production and services. It is the major enabler of social change and development in the world. One of the major developments which had profound impact on the economic growth pattern in the world in the new millennium has been the strides in the domain of Information Technology(IT) sector. The world has observed significant growth of applications in diverting areas of IT. This technology has drastically changed the working of today’s organizations by increasing efficiency and effectiveness over the past decades. Now Information Technology permeates nearly every aspect of modern business operations and communications. It is being used over globe by all the organizations of developed and developing countries for performance improvements. Similar to other developing countries, this technology is also being applied by majority of the organizations of Pakistan. Due to its increasing importance, the Information Technology is one of the most exciting areas of research that has been the focus of intense interest throughout the world over the decades but little has been devoted to examining the impact of IT on Pakistani organizations.

The purpose of this study was to explore the relationship of IT with management performance(efficiency and effectiveness) of Pakistani organizations. The manufacturing and banking sectors of Pakistan are most progressing sectors and back bone of Pakistan economy. Both the sectors have experienced different reforms from time to time and at present are great user of IT, therefore, are selected for this research. These sectors have made massive investments in IT by installing different IT systems from time to time. But despite all this, they are still unable to find the most suitable systems, to achieve its full benefits. They are experiencing with different systems and facing difficulties in implementing various IT systems. This study examined the organizational performance of banking and manufacturing sectors of Pakistan over decade from different angels in addition to indicating the real problems these sectors are encountering in IT usages. Various aspects associated with the topic have been explored and discussed in the literature review and the primary data for detail study was collected from in-depth

i interviews and field surveys of 48 companies, 24 in manufacturing sector(12 local and 12 foreign) and 24 in banking sector(12 local and 12 foreign).

The data was tested by applying different financial and statistical techniques and the results of the research have led to the conclusions that IT investments have positive impact on the organizational performance and the banking sector performance outstrips the performance of manufacturing sector. Although all the good performing companies are using IT and most of them working with in-house developed IT systems, but the performance of the companies which are using standard applications in both the sectors is found to be excellent. However, it is highly dependent on the use of type of information systems. The socio-cultural/organizational/systemic factors like cultural, social, political, economic and human factors have impeded a lot to the implementation of IT in Pakistan. In addition, various other problems like Pakistan inadequate telecommunication infrastructure, lack of talented employees, improper planning, unjustified investment and wrong selection of hardware and software are found to be the major constraints in implementation of IT in Pakistani organizations. The employee education, training, motivation, and reward were revealed as some of the measure the sample companies have taken to overcome employee resistance in IT adoption. Moreover, top management commitment and support were found to be the major reasons for IT success in the organizations.

Considering the policy issues, it is suggested that the companies should install standard customized systems for their core areas with compatible hardware, across the organization. The IT project cost is to be properly categorized and rationalized so that it should not exceed the expected benefits. The selection of software and hardware is to be made more prudent. The increasing operating cost could be minimized by outsourcing certain IT functions. Proper authenticity and security of the electronic transactions also is to be ensured. There is also need from the government to further reduce communication charges and expand telecommunication infrastructure to all areas. It is also suggested that the specialized training for the world renowned standard E.R.P application packages such as SAP, Oracle, Misys etc., is needed to be started at the mass level on low cost basis by

ii educational institutions/universities by establishing E.R.P centers in collaboration with leading E.R.P providers. The E.R.P application systems give more efficiency to the organization, therefore, are getting popularity in the world and in Pakistan too. Due to their better performance results the organizations are converting their old IT systems to these new E.R.P solutions rapidly. So there is a great need for trained human resource in this field in the organizations.

The government should also support these training initiatives and give more grants to those educational institutions who want to establish such E.R.P centers. The same type of training should also be started by E.R.P vendors by establishing some training academies through out Pakistan or at least in its all big cities.

The procedures to retain the loyalty of the customer with increasing IT based e-business popularity, in absence of physical contact, are also to be devised. The top management, though very well aware of IT importance should also involve the IT division/department head in the company’s strategic planning, product innovations, and in all other managerial activities.

iii Acknowledgements

I am thankful to Allah Almighty, who is most beneficent and merciful, who blessed me with courage, patience and enabled me to successfully complete this study with devotion and spirit.

First and the foremost of all I am highly indebted to my talented supervisor, Prof. Dr. Muhammad Zafarullah, for his inspiration to me to undertake this research. His continuous guidance, expert attentions, critical insights, kindness, maximum support and sympathetic generous attitude through out the research have been a great source for me to make this research possible.

My profound thanks are for Prof. Dr. Rana Abdul Wajid, Director Center for Statistic Lahore School of Economics, for extending all his generous guidance in bringing this thesis to its final shape. I am highly grateful for his invaluable guidance and encouraging discussions to accomplish this task. I also thank him for his hospitality which he showed whenever I visited him in L.S.E for the purpose of my research.

I also owe my thanks to Prof Dr. Hayat M. Awan, Professor of Operations Research, Institute of Management Sciences, for his valuable guidance in research design and questionnaire formulation stages of my thesis. The unconditional support and efforts of Mr. Liaqat Durrani, Managing Director SBP, for providing me all facilities from Sate Bank of Pakistan to carry out this research are also highly appreciated. He deserves very special thanks for helping me to make this manuscript possible.

I owe a special debt to Mr. Javed Iqbal, Country Corporate Head Allied Bank Ltd, for arranging my surveys in different manufacturing companies across the country. I gratefully appreciate the help extended to me by Mr. Amjad Bashir, Uniliver, Mr. Anwar Chaudhary, LUMS, Mr. Bashir Ahmad, SBP, Mr. Rehman Mirza, SBP and Mr. Farooq Khizar, KSE, in various ways for collection of relevant data. I believe without their help, I would have not been able to compile my thesis.

I also appreciate the sincere help, cooperation and encouragements I received from my dear friends Shumail Abbas, Muntazir Mehdi, and Raheem Malik whose support made things less perplex for me in this precarious environment.

Last but not the least I bow my head to my mother, whose sincere love, care and prays always had been source of my success. My wife Rukhsana, daughter Fizza and sons Faraz and Sameer also deserve thanks for their patience and sacrifices which they made during the course of my research work.

In closing, I wish to thank my student Ejaz Asalm, institute fellows Quratulain Bosan, Nomeeta Zainab, A.B Malik and all other people who directly or indirectly helped and assisted me during my study. I sincerely wish all of them best in their pursuits.

Muhammad Shaukat

DEDICATED

the memories of my loving father , mother and dearest sister, Who passed away during my thesis work.

vi Table Of Contents

Page No

Chapter 1.

Introduction

1.1.0. Background 01 1.2.0. Significance of the study 05 1.3.0. Specific objectives of the study 07 1.4.0. Organization of the study 08 Chapter 2.

IT-Concepts, Developments & Impact on Management 16

2.01 Introduction 16

Section 1

Information Technology and its Developments 17

2.1.1 Definition of Information Technology 17 2.1.2 Information Technology Developments 19 2.1.2.1 Historical Developments 19 2.1.2.2 Recent Developments 23

Section 2

Organizational Performance and its Assessment 28

2.2.1 Defining Organizational Performance 28 2.2.2 Assessment of Organizational Performance 29 2.2.2.1 Defining Management Efficiency 29 2.2.2.2 Types of efficiency 31 2.2.2.3 Measuring Efficiency 32 2.2.2.4 Defining Management Effectiveness 33 2.2.2.5 Approaches for Assessing Org. Effectiveness 33 2.2.2.5.1 System Resource Assessment 34 2.2.2.5.2 Internal Process Assessment 34 2.2.2.5.3 Goal assessment 34 2.2.2.5.4 Strategic Constituency Assessment 35

2.2.2.6 Comparison of Approaches of Effectiveness 35 2.2.2.7 Relationship between Efficiency and Effectiveness 36

vii

Table Of Contents

Page No Section 3

Information Technology And Organizational Performance 38

2.3.1 IT Impact on Management Performance: An Overview 38 2.3.2 IT and business process reengineering 42 2.3.2.1 IT as Strategic Weapon 42 2.3.2.2 IT and Organization Reengineering 44 2.3.2.3 IT and Organization Transformation 46 2.3.2.4 IT and Innovations 47 2.3.2.5 IT and Social & Economic Changes 48

2.3.3 IT and Management functions 51 2.3.3.1 IT and Planning 52 2.3.3.2 IT and Organizing 52 2.3.3.3 IT and Leading 56 2.3.3.4 IT and Control 57

2.3.4 Information Systems and Manager 59 2.3.4.1 Operational Level Systems 59 2.3.4.2 Knowledge Level Systems 59 2.3.4.3 Management Level Systems 59 2.3.4.4 Strategic Level Systems. 60 2.3.4.5 Transaction Processing Systems 61 2.3.4.6 Office Automation Systems 62 2.3.4.7 Management Information Systems 62 2.3.4.8 Decision Support Systems 63 2.3.4.9 Executive Support Systems. 66

2.4.0 Conclusions 67

Chapter 3.

Information Technology in Pakistan 79

3.01 Introduction 79

Section 1

Information Technology status in Pakistan 80

3.1.1 Historical Developments 80 3.1.2 Recent Developments 83

viii Table Of Contents

Page No

3.1.3 Pakistan Information Technology Infrastructure 86 3.1.3.1 Hardware Industry in Pakistan 87 3.1.3.2 Software Industry in Pakistan 88 3.1.4 Internet Status in Pakistan 91 3.1.5 E-Commerce Status in Pakistan 93 3.1.6 Telecommunication Status in Pakistan 96 3.1.7 International Communication: Internet Infrastructure 101 3.1.8 IT Human Resources Status in Pakistan. 103 3.1.9 Conclusions 106

Section 2

IT in Banking and Manufacturing Organization 108

3.2.0 General 108 3.2.1 IT in Banking Organization 110 3.2.1.1 Banking Sector Of Pakistan & IT: An Overview 115 3.2.2 IT in Manufacturing Organization 119 3.2.2.1 Manuf.Sector of Pakistan & IT: An Overview 121 3.3.0 Conclusions 123

Chapter 4.

Factor Affecting Information Technology Adoption 131

4.1.0 Introduction 131 4.1.1 Cultural factors 132 4.1.2 Human factors 137 4.1.3 Social factors 140 4.1.4 Organizational structural factors 142 4.1.5 Political factors 144 4.1.6 Economic factors 146 4.2.0 Conclusions 147

Chapter 5.

Research Model 154

5.1.0 General 154 5.1.1 Propositions Derivations 157 5.2.0 Conclusions 158

ix Table Of Contents

Page No Chapter 6.

Research Methodology 159

6.1.0 General 159 6.2.0 Objective of Research 161 6.3.0 Collection of Information 162 6.4.0 Methods for collection of data 162 6.4.1 Methods to collect secondary data 162 6.4.2 Methods to collect primary data 164 6.5.0 Data Limitation 169 6.6.0 Sample Size 171

Chapter 7.

Data Analysis And Interpretation 176

7.1.0 General 176 7.2.0 Data Analysis Methods 176 7.3.0 Analysis Of Research Hypothesis No 1 178 7.4.0 Analysis Of Research Hypothesis No 2 201 7.5.0 Analysis Of Research Hypothesis No 3 210 7.6.0 Analysis Of Research Hypothesis No 4 225 7.7.0 Analysis Of Research Hypothesis No 5 229 7.8.0 Analysis Of Research Hypothesis No 6 233 7.9.0 Overall Conclusions of all Hypothesis 234

Chapter 8.

Findings, Recommendations And Conclusions 240

8.1.0 General 240 8.2.0 Major findings 240 8.3.0 Recommendations 246 8.4.0 Overall Conclusions 258 8.5.0 Directions for future research 259

Appendices i-xxxvii

x List Of Figures

Figure Page No.

2.1 The Exponential Growth of Computing 1900-2100 22 2.2 History of Information Technology Development 26 2.3 A road map of efficiency decomposition 32 2.4 Kind of Information Systems 60 2.5 Types of Information Systems 64 5.1 Research Framework 155 7.1 Income & IT expense comparison of all companies n=20 184 7.2 Income & IT expense comparison of all companies n=32 184 7.3 Income & IT expense comparison of all companies n=32 184 7.4 Schematic diagram for ordered means-Customer Satisfaction 192 7.5 Schematic diagram for ordered means-Customer Links 194 7.6 Schematic diagram for ordered means-Job Interest of employee 197 7.7 Functions IT playing in organizations 203 7.8 Application software usage Analysis 206 7.9 Information System Levels in organizations 209 7.10 IT Adoption Problems 211 7.11 Schematic diagram for ordered means-Governmental 220 7.12 Schematic diagram for ordered means-Social 221 7.13 Schematic diagram for ordered means-Political 223 7.14 Schematic diagram for ordered means-Economic 224 7.15 Measures to Overcome IT Adoption Problems 228 7.16 IT Investment Trends 231 7.17 Reasons for IT Success 232

List Of Tables

Tables Page No.

2.1 Changing role of IT over years 44 3.1 Statistic Of Pakistan’s IT/ITES Industry 97 3.2 Approximate no of IT professional in Pakistan 105 3.3 Pakistan’s e-Banking Infrastructure Statistic 118 3.4 Sector Share in G.D.P up to 2002 122 4.1 Information Technology Barriers Summary 145 6.1 List of Group 1 Companies Surveyed 172 6.2 List of Group 2 Companies Surveyed 173 6.3 List of Banking Sector Surveyed 173 6.4 List of Manufacturing Sector Surveyed 174 7.1(a) Regression Results For Banking Sector 179 7.1(b) Regression Results For Manufacturing Sector 179 7.1(c) Regression Results For All Companies 180 7.1(d) Regression Results For All Companies 2 180 7.2(a) Regression Results For Banking Sector 1990-2004 180 7.2(b) Regression Results For Manufacturing Sector 180 7.2(c) Regression Results For All Companies 180 7.2(d) Regression Results For All Companies 1999-2004 181 7.3 Regression Results For Total & IT Employees. 181 7.4(a-c) Income & IT expense comparison for different years 183 7.5 Results of one sample t-test Customer Satisfaction 191 7.6 Results of one way ANNOVA-IT Adoption Benefits 192 7.7 Results of one sample t-test Better Customer Links 193 7.8 Results of one sample t-test Company Image 195 7.9 Results of one sample t-test Job Interest of Employees 196 7.10 Results of one sample t-test Stake Holder Confidence 198 7.11 Results of one sample t-test Interoffice Links 199

xii List Of Tables

Tables Page No.

7.12(a) Reg. Results IT Levels Vs Quantitative variable 202 7.12(b) Reg. Results IT functions Vs Quantitative variable 202 7.13 Chi-square Results of Different Problems 203 7.14 Chi-square Results of Different Problems - 211 7.15 Results of one sample t-test Culture 215 7.16 Results of one way ANNOVA-All Factors 215 7.17 Results of one sample t-test Human 212 7.18 Results of one sample t-test Organizational 218 7.19 Results of one sample t-test Governmental 219 7.20 Results of one sample t-test Social 221 7.21 Results of one sample t-test Political 222 7.22 Results of one sample t-test Economical 224 7.23 Results of Measures to overcome IT adoption 227 7.24 Results of one sample z-tests-IT success reasons 230 7.25 IT Investments Trends-Sector Wise 232

xiii Acronyms

ABC Atanasoff Barry Computer ABL Allied Bank Ltd ACBL Askari Commercial Bank Ltd ASCI Application Specific Integration Circuit ATM Automated Teller Machine ANOVA Analysis Of Variance CAD Computer Aid Designing CAM Computer Aid Manufacturing CBR Central Board Of Revenue CIM Computer Integrated Manufacturing DSS Decision Support System DSL Digital Subscriber Line E-Business Electronic Business E-Commerce Electronic Commerce E.R.P Enterprise Resource Planning ESS Executive Support System FBL Faisal Bank Ltd FWBL First Woman Bank Ltd HBL Habib Bank Ltd IBM International Business Machine ICT Information And Communication Technology ICL International Computer Ltd IS Information System ISDN Integrated Services Data Network ISP Internet Service Provider IT Information Technology KWS Knowledge Worker System LAN Local Area Network

xiv Acronyms

MCB Muslim Commercial Bank NCR National Cash Register NBP National Bank Ltd PASHA Pakistan Software Houses Association PTC Pakistan Telecommunication Corporation PTA Pakistan Telecommunication Authority PESB Pakistan Software Export Board MOST Ministry Of Science And Technology MIT Ministry Of Information Technology MIS Management Information System OA Office Automation OFC Optical Fiber Cable RDBM Relational Data Base Management R&D Research And Development S&T Science And Technology SBP State Bank Of Pakistan SDC Skill Development Centre SECP Security & Exchange Commission Of Pakistan TAN Tiny Area Network TPS Transaction Processing System VAN Value Added Network VPN Virtual Private Network VSAT Very Small Aperture Terminal WAN Wide Area Network

WWW World Wide Web

Chapter

1 Introduction

Background 1.1.0. Information Technology(IT) is a powerful force in today’s global society. The advent of computers and IT has been perhaps the single massive drive impacting organizations during past few decades. IT is a diversified version of computer sciences and it is not only a conventional keypunching, data storing, manipulation and report printing but it is information collection, transmission, logging, recording, intelligent decision-making and presentation in desired form at desired place. Greaves(2005) explains that the IT is revolutionizing all the living ways. It is changing all aspects of life and life style. The digital revolution has given mankind the ability to treat information with mathematical precision, to transmit it at very high accuracy and to manipulate it at will. Marshall(2002) views that the amount of calculation power which is available to mankind is increasing at an exponential rate. Computers and communications are becoming an integral parts of every days lives. Arguably, no area is as promising in its potential as IT. No doubt, it has given a new meaning to the word “Convenience”.

Information Technology has drastically changed the business landscapes and word “IT” has become the “Catchword” of the modern life today. Long and Long(1999) identify computer as the key technological device producing the third greatest revolution in human history. Automation via computerization is one of the highest priorities and objectives in modern organizations. Morton(1998) highlights that IT applications impact task productivity, task innovation, consumer satisfaction and management control. Computer can have an important role in leveraging productivity and efficiency in various organizations, government and private alike. Morton(1998) further argues that computer ensure a fast, reliable way to execute all tasks, and organizations with successful IT adoption and implementation processes are generating significant performance gains and competitive advantages.

The business world today stands on the threshold of revolutionary change, change that will affect every aspect of doing business in future. The technology of today and rapidly changing technology of tomorrow is leading the way to a truly global marketplace. The factors of geographical locations, time and distance are no longer the barrier that they were in the past. Today, IT influences the structure and operations of organizations more profoundly than any other technology ever had (Mahmood and Mann, 1993). IT has not only changed the work styles of the organizations but also has significantly increased the efficiency and output, resulting therein the increase in profits of the firms. The growth of any company, in addition to capital, intelligent human resources and good production techniques, is now highly dependable on the use of computers or Information Technology specifically (Gupta, 2000;Reyonld, 1995; Morgen, 1998).

It has been argued by many researchers that IT use has become an important part of the world productivity in the recent years(Agouram ang Ingam, 2003; Martin et. al 1999). The IT revolution has transformed the world at such a pace and in ways that only a few had the vision to contemplate just a decade ago. Dadashzadeh(2002) points out IT rapid progress in a ways that in January 1996, 30 million people were using the Internet but at the dawn of the new century, however, more than 400 million people were online. This 1333 percent change over only five years is a harbinger of how the Internet will continue to alter the way, how the work is done, how business is transacted, how government services are delivered, how children learn, how health care is received, even how social affairs are conducted. Though the IT revolution began in the United States, but it has affected the entire world by producing a new, Internet-based, digital economy in which geographical distance and borders have become less of an obstacle to global trade.

These advances in IT have also opened up market niches for competitors from unexpected places. A study by the joint Economic Committee of the United States Congress concludes that the Information Technology is an important factor in the recent acceleration of productivity growth and that both the production and the use of IT contribute to the productivity revival. Indeed, the new generation of IT, especially web- based electronic business technologies have dramatically changed the nature of business competition and have altered the structure of markets in a number of industries. Over the

past two decades, large global corporations have made enormous investments in IT(William and Sawyar, 2000).

The developing countries are increasingly deploying IT to solve their developmental problems by investing in it from their own sources as well as by borrowing from different institutions (Odedra and Kluzer, 1988). Lending for IT by the World Bank has also been quite pervasive and growing at six times growth rate of total banks’ lending. A study has shown that the significant IT components were present in over 90% of all World Bank’s lending in developing countries (Harris and Davison, 1999). It is also estimated that total annual worldwide expenditure on IT probably exceeds one point five trillion US $ per year and is growing at about 10% compounded annually(Anandarjan and Anakwe, 2002).

Information Technology also creates a serious dilemma for management today. IT innovations have the potential for changing the competitive game for any organization. On the other hand, the size of IT investments put increasing pressure on managers to asses its business value. One key to this dilemma is to improve the ability to measure and track the impact of IT on productivity. Alongside, the seemingly inexorable rise in IT investment in the last 20 years, there have been considerable uncertainty and concern about the productivity and efficiency impact of IT being experienced in work organization. However, in quest of improving efficiency and effectiveness, the companies are making heavy investments in IT. These enduring magnitudes of investment in IT have drawn attention of many researchers, managers and policy makers to the impacts of IT on growth and productivity. The expectation was that increased investment in IT would naturally lead to increase performance of organization. But despite the massive investments in IT both in the developed and developing economies, the impact of IT on productivity and business performance continued to be questioned(Winter and Tylor, 1998). Despite hundreds of studies carried out, scholars remained deeply divided into two groups which can be identified as “Productivity Paradox-IT has no impacts on productivity” (Loveman, 1994; Mitra & Brendt 1990; Dasgupta et. al(1999) etc.), and “Productivity Payoff- IT does improve productivity” (Bender, 1986; Harris & Katz, 1991,

Brynjolfsson, 1993; Brynjolfsson, & Hitt, 1996, 1998; Attewel & Rule, 1984; Dewan & Kraemer, 1998; Weill, 1992; Mehmood & Mann, 2000).

It has also been debated in the literature that the differences in results of both the groups are not real but may be due to different measures and methods used by different researchers for measuring IT performance. The issues seem also be highlighted that it is not the impact of IT on productivity and efficiency that makes the difference but it is on the deficiencies of measurement of both productivity measurement indicators and IT measurement indicators. There are methodological issues. However, the group that believes that the IT improve productivity argues that productivity paradox findings are misleading, and do not capture many elements related to actual productivity measurements, thus leaving a gap in between (Dawett and Jones, 2001; Bhatt 2000 etc.). The “Payoff” group’s finding is complemented by a third group whose research on specific areas of impact of IT on productivity such as on knowledge workers, on employment, and on manufacturing processes, did find persuasive evidence of gains in productivity (Kelly,1994);Savoie & Raisinghani(1999); Gader(1996). Synthesizing the work of various studies in IT research, the final conclusion in this regard can be made that “Yes” IT investment is productive but there is yet little empirical evidence of this increased productivity besides that most of the above refered researches have applied statistical or financial techniques to measure the efficiency of IT.

The literature on IT related to the developing countries has expanded and varied to include both optimistic and pessimistic opinions as well as critical apologetic views of changes and forces driving them. The literature shows that IT generates many benefits and is a key to progress if it is accepted and used warmly by the concern employees in organizations (Venkatesh & Davis, 2000). There is a significant resistance to adopting and using computer resources in developing countries. In many countries, organizations experience difficulty and even failure in transferring IT into practice despite spending billions of dollars (Hill et. al, 2002). The problems seem to be worst in developing countries (Mehta & Shah 1998; Davis, 1993). The goal of every information systems, based in any organization is to improve performance on the job and this performance

efficiency is only achieved when IT is deployed properly. The slow IT diffusion in developing countries could be attributed to poor infrastructure, language barriers, sociopolitical, cultural and economic risks and conflicts (Chan 2000; Gader, 1999; Odedra & Kluzer, 1998). In their quest for development, many developing countries put great hope in use of IT. Yet, the challenges of IT diffusion in these countries are by no means identical to the ones in the developed countries. The challenges faced by developing countries in harnessing the full potential of IT are not really very different from those of that confronted by the developed countries or rather these are more critical.

IT now is the most preferred choice of all the countries to upgrade their economies and become competitive in the global market place. The IT based economies have streamlined the most complex economies of the world and enhanced the productivity to the level where an economy such as US has wriggled out of the entire trillion plus dollars national deficit and turned into a surplus in recent years. The world economy now has moved from low-value basic industries to a fast paced high-value information based economy.

Significance of the Study 1.2.0. The impetus for this research came from the main reason that in modern organizations technology is a key to competitiveness and economic growth. Among all the technologies of this time, progress in IT has no doubt had and continues to have the greatest influence on the global economy, making it possible to collect, process, and transmit information at breathtaking speed and declining cost, thereby increasing productivity and improving quality and efficiency in all types of industries and services in the entire world. Pakistan has also accepted this challenge of 21st century by making efforts in the development of IT. A decade ago IT had very little introduction in the country, but very soon with the efforts both on private and government fronts the concept of IT has become very popular with all Pakistani organizations.

At present IT has become a reality in all most all the activities of all Pakistani organizations and Pakistan now is one of those developing countries, which is trying to put all its efforts to get maximum benefits of IT. Many organizations, which are working

in Pakistan, now are using IT to increase their efficiency and productivity. The latest information about the new inventions, going on around the globe and the knowledge about the high-tech advanced products available in the world market is being spread widely in the country. Many business entities of Pakistan that have deployed IT are able to some extent to optimize cost, reduce wastage, serve their clients better and make timely decisions. They become capable to serve their customers in a better way and ultimate benefit they receive is in improvement in profit margins and better return on investment. The savings made are far higher than the investments made in technology but still a lot more has to be done to make full use of IT in Pakistan’s core industries.

The banking and manufacturing industries of Pakistan constitute a major portion of Pakistan’s economy and have experienced continuous structural and technological changes in different regimes. The manufacturing and banking industries are the major users of IT products and have also gone through innovations and shocks throughout the 1990s either due to the rapid changing technology or unexpected shocks, such as economic sanctions and ban on Pakistan after nuclear explosion on supply of some new technologies from advanced countries. However, by somehow, both the sectors i.e. manufacturing and banking have managed, to some extent, the pace with new technologies for their growth and performance increase.

This study is therefore a modest yet significant attempt to explore the importance of the role which IT currently is playing in the organizations and its impact on organizational performance i.e efficiency “minimum utilization of resources and getting maximum output” and effectiveness “how well the job is gets done” Robbins and Coulter(2003), of Pakistani banking and manufacturing industries, over time period of 1994-2004. Various studies have been undertaken to measure the impact of IT on organizational performance of business organizations using different performance indicators which are considered key factors. These variables include income, customer satisfaction, supplier/customer links, company image, job interest of employees, stake holders confidence and interoffice links e.t.c. Researchers like Parthasamthy & Sethi(1993), Kelly(1994), Earls & Fenney(1996), Rumizen(1998), O’Dell(1999) etc. have investigated the impact of IT on

overall incomes/profits of the companies and found positive impact. Whereas, Franklin(1997), Olalla(2000), Schmid et. al(2001), Zee(2004) etc. have seen the increase/decrease in customer satisfaction, company image, job interest of employees, stake holders confidence, interoffice link etc. after implementation of IT and have concluded that IT ultimately has positive impact . This study measured the relationship of IT with organizational performance (based upon above variables) of Pakistani companies operating in banking and manufacturing sectors. The study also centered on the identification of type and characteristics of IT available in the world, and that IT, which is being used in Pakistani organizations. Identification of factors affecting proper IT implementation, potential barriers, strategies to overcome these barriers, an identification of suitable world level IT infrastructure and the proper direction of investments flow on this resource to exploit its full potential were also other focuses of this study. The researcher believes that no study of similar nature has ever been conducted so far in Pakistan.

Specific Objectives Of the study 1.3.0 The central objective of the present study was to sought the relationship of Information Technology with organizational performance of Pakistani companies in term of both efficency and effectiveness. It has also focused on the problems faced by different business firms in Pakistan in coping with the new IT developments and in successful implementation of IT systems. It is almost desire of each and every company to increase its performance i.e efficiency and effectiveness, by incurring less cost and by applying all latest technologies, techniques and tools. But to achieve so, the organizations do face many problems in the way of adoption and implementation of any new technologies in their setup. These problems may arise as a result of deploying technologies without planning, incompetent human resources, poor management, lack of financial resources, culture, political, social, governmental and other organizational, systemic and environmental pressures.

This research has tried to identify those factors which facilititate or limit the firms operating in Pakistan’s banking and manufacturing sectors in IT adoption. As the IT

includes computer hardware, software, personnel, telecommunications and resources assigned to supporting IT, investigations therefore are focused on such issues as identifying that which part of IT and what IT mix is most important and suitable for organization success and has the grater effect on increasing organizational performance. It has also examined that how this effect is achieved by deploying proper IT.

The study highlighted the importance of training and user involvement in IT projects. It also identified the reasons for slow pace of IT implementation in Pakistani firms. It examined the investments of firms in IT and its comparable usefulness/ benefits. It exploited IT as strategic asset, management tool and a success factor for Pakistani firms and identified a suitable infrastructure for successful implementation of IT in business firms to increase their efficiency. Lastly, the study has also identified the role of Pakistani Government to boost up IT sector and its economical and quality availability to the organizations.

Organization of the Study. 1.4.0. This study is divided into following chapters. A brief description of each chapter is presented as under. Following the introduction is,

Chapter 2: IT- Developments & Impact on organizations. This chapter deals with the definition, development and management impact of IT. It presents a number of views relating to Information Technology together with a discussion that how IT is developed over time and what is its present state?. IT is playing an important role in the society and in organizations. Therefore, it has profound effects on the performance of the managers and overall organizations. IT has transformed the nature of international business and it is one of the largest and fastest growing industrial sectors for the coming century. Electronic commerce, electronic data interchange, electronic government and development in telecommunication are main forces in IT revolution. All the national governments have the aim of bringing the benefits of IT to every segment of the economy, government and public life. There is no sector, manufacturing, service, trade or government activity where IT can not be applied. It gives many advantages and benefits in term of productivity, safety, efficiency, reliability as well as savings in cost

and time. The IT role in increasing organizational performance in all management functions with different IT based information systems is also presented in this chapter. This chapter is divided into three sections Section 1. Defines Information Technology and describes its development over the time. Section 2. Discusses the organization performance, its components and different methods for its assessment. Section 3. Examines the importance of IT in increasing organizational performance. Emphasizes is also made to view the IT impact on business processes and on management functions. An overview of different management systems, which are available to the managers to perform their jobs effectively in the organizations, is also given in this chapter.

Chapter 3: Information Technology in Pakistan 5.0.1 This chapter presents discussion on Information Technology status in Pakistan. Information Technology is the key enabler of change in today’s rapidly evolving business environment. IT revolution has changed the life style of people in every part of the world. It has eliminated the geographical distances and due to advance communication facilities, the entire world can be viewed on computer screen by just a click of a button. IT is the major contributor to the progress of the developed countries. The effective use of IT is an essential element of competing in a fast-paced, knowledge based economy. IT ‘cross-cuts’ all operational functions within the organization and acts as the fabric that knits together business processes. Today governments and private companies around the world are working on IT solutions required for their growth. This technology has emerged as a very fast growing sector in Pakistan as well and obviously IT sector is a deep resowant sound. With continuous and concerted patronage of the government, there has been unmatched development in IT infrastructure in the recent years. The government, in the IT sector, is making sizeable investments and a huge chunk of this budget is meant for human resource development and provision of enabling infrastructure. Majority of the organizations working in Pakistan are making use of IT to increase their performance but of course there is a performance variance among different industries.

This chapter consists of two sections. Section I examines IT history in Pakistan, Pakistani Government contributions to support IT diffusion in the country, IT usage in Pakistan industry, Pakistan IT infrastructure i.e. Pakistan’s hardware and software industry, status of

Internet, E-Commerce, Human Resources and Telecommunication in Pakistan. It also discusses growth and potentials of IT in Pakistan. Section II first brings into prominance the importance of IT usages in business organizations and then it leads to the core areas of research and discusses IT usage status in Pakistan’s Manufacturing and Banking Industry.

Chapter 4: Factors Affecting Information Technology Adoption. The use of technology and IT in particular is essential to the successful operations of the today’s organizations. Information Technology now is one of the major factors improving productivity and performance of the organizations. As the introduction and adoption of any new technology is encountered with many challenges and obstacles, so is the case with IT. A number of factors appear to impede/facilitate the diffusion of IT, in both developing and developed countries and this is particularly true for small and big organizations.

This chapter discusses different factors that may affect an organizations’ decision to adopt an innovation. These factors include organizational factors like culture, structural, human resources and systemic factors like social, governmental, economical, political etc. It also discusses different issues relating to these factors and the ways to make these factors more favorable for IT adoption particular in Pakistani context. The conclusion of the discussion is given at the end of the chapter.

Chapter 5: Research Model This chapter presents the research framework which is drawn based upon the literature review (Theoritical, empirical and Pakistan specific).This framework graphically depitch the relationship of IT usage and organiozationa performance and the factors impacting that usage. The research questions drawn from this framework are also presented in this chapter.

Chapter 6: Research Methodology This chapter describes the methodology used to collect data for the purpose of this research. Various methods of collecting data are discussed and the the survey through questionnaire methods with a structured close ended questionnaire in personal interview

method was considered to be the most appropriate for fulfilling the objectives of this study, therefore, it was used for this research. In the sample a total of 48 companies (24 locals and 24 foreign) are selected both from banking and manufacturing sectors of Pakistan. Data limitation, problems of researcher in data collection, and list of sample companies are also discussed in this chapter.

Chapter 7: Data Analysis And Interpretations This chapter presents analyses of the data and interprets the finding of the surveys. This is done by developing six hypotheses based upon the research questions developed in chapter 5. A sperate discussion on results of each hypothesis is made and the overall conclusion of all the hypothese is made at the end of this chapter.

Chapter 8: Findings, Conclusions And Recommendations This chapter presents main conclusions and findings of the research together with the researcher’s recommendations i.e. IT is key technology for the world today and and for Pakistan as well. Pakistni Government now is fully supporting the use of IT in the country but to more boost the use of IT, still there exist a need for Government to act more quickely with newer plans and polices by overcoming existing barriers. Based upon the literature review and the data analysis collected through survey, various recommendations of this study are made in this chapter for improvement of IT utilization for Pakistan banking and manufacturing sectors in particular and for other organizations in general.

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Chapter

Information Technology: 2 Concept, developments and Impact on organizational management

Introduction 2.01. This chapter deals with the definition, development and management impact of IT. It presents a number of views relating to Information Technology together with a discussion that how IT is developed over time and what is its present state?. IT is playing an important role in the society and in organizations; therefore, it has profound effects on the performance of the managers and overall organizations. Information Technology has transformed the nature of international business and it is one of the largest and fastest growing industrial sectors for the coming century. Electronic commerce, electronic data interchange, electronic government and development in telecommunication are main forces in IT revolution. All the national governments have shifted their strategies with the aim of bringing the benefits of IT to every segment of the economy, government, and public life. There is no sector, manufacturing, service, trade or government activity where IT can not be applied. It gives many advantages and benefits in term of productivity, safety, efficiency, reliability as well as savings in cost and time.

The IT role in increasing organizational performance in all management functions with different IT based information systems is also presented in this chapter. The conclusions of the discussion are presented at the end. The chapter is divided into three sections: Section 1 Defines IT and describes its development over the time. Discusses the impact of IT on management and organizations’ performance. Section 2 Explains the four management functions and how IT helps managers in performing these functions. Section 3 Gives an overview of different IT based management systems, which are available to the managers to perform their jobs in the organization.

Section 1

Information Technology and its Development

Defining Information Technology 2.1.1. Information Technology has been defined in various ways by different authors. Over the years, IT has been conceptualized and measured differently by different researchers. The majority of the authors, however, parallel Information Technology with computer systems. Whisler (1970), for instance, defines IT as “The computer based technology of sensing, coding, transmitting, translating and transforming information”. Robey (1977) describes IT as “The installation of computer based information systems”. Cash et al.(1983) wider IT scope and define Information Technology as “The integration of, data processing, telecommunications and office automation”.

Buchanan and Boddy (1983) define IT as “All technology dealing with computer aided manufacturing and computer aided administration”. According to Reynold (1997) “IT is any computer based system used in transferring of information from one person to another person or group of persons who requires that information for diversified activities”. Mehta and Shah (1998) define IT as “Information Technology is a combination of technologies as computer networks, imaging technology, massive data storage and artificial intelligence”. Long and Long (1999) have tried to link all above definitions and give definition of IT in this way that “IT is a collective reference to the integration of computing technology and information processing. Any form of computer based system that has the capability of collecting, processing, and outputting information is called Information Technology”.

According to another definition “IT means the use of hardware, software services and supporting infrastructure for management of delivering information. IT is using the hardware and software used to store, retrieve, process and transmit data.”(Laudon and Laudon, 1998).

According to Frenzel (1999) “Information Technology is the term that describes the organization’s computing and communications, infrastructure, including computer systems, telecommunication networks, and multimedia (combined audio, text, and video) hardware and software”. Gupta (2000) narrates that “IT includes hardware, software, databases, networks, and other related components which are used to build information systems” Kendall & Kendall (2000) also comes up with the same idea and say that “IT is the technology that supports activities involving the creations, storage, manipulation and communication of information together with their related methods and management applications”.

Chan (2000) gives another definition of IT that “IT is the convergence of computing, telecommunication and imaging technologies”. He further says that “Information Technology has arisen as a separate technology by the convergence of computing, telecommunications and video techniques. Computing provides the capability for processing and storing information, telecommunication providing the vehicle for communicating it and video providing high quality display of images.”

William and Sawyar (2005) define IT as a general term that describes any technology that help to produce, manipulate, process, store, communicate, and/or disseminate information. This definition may be regarded as the comprehensive definition, as it covers all aspects discussed by different researchers above and includes all the components and processes needed to carry out information processing work in the organization.

It can be summarized from above definitions that IT concept came from a merging of computer with telecommunications technologies. Many researchers have defined Information Technology as a term that encompasses all forms of technology utilized to create, capture, manipulate, communicate, exchange, present, and use information in its various forms(business data, voice conversation, still image, motion pictures, multimedia presentation, an other forms, including those yet not conceived (Poku & Vlosky, 2002). Some authors like King and Teo (1996) and Stump and Sriram (1997) also include

personnel and resources dedicated to supporting these capabilities. It has been noted from the above discussions that there are two important parts of IT i.e. computers and communications which are further segregated into five basic components i.e computers, communications technology(including networks), workstations, robotics and computer chips(storage) (Morton,1988). Thus as a whole it can be said that when computer and communications technologies are combined, the result is Information Technology or ‘infotech’.

Information System Management is another term, which is used synonymously for Information Technology and these two terms have become so linked to each other that they are often used interchangeably(Shelly et. al, 2005). Oliner and Sichal (2000) also argued that the terms ‘Information System’ and ‘Information Technology’ have become so interrelated that they are often used in substitute to each other.

In nutshell it can be said that IT is a convenient term which includs both telephony and computer technology in same ways. IT has become the generally accepted term that encompasses the rapidly expanding range of equipment (Computers, data, storage devices, network and communications devices).

2.1.2 Information Technology Developments.

Historical Developments 2.1.2.1. The Information Technology is not new. The history of computers began about 2000 years ago, following the birth of the abacus, a wooden rack holding two horizontal wires with beads strung on them. When these beads were moved around, according to programming rules memorized by the user and all regular arithmetic problems were done. Another important invention around the same time was the Astrolabe, used for navigation. Blaise Pascal is usually credited with building the first digital computer in 1624 which added numbers entered with dials. In 1671, Gottfried Wilhelm Von Leibniz started assembling a computer which was completed in 1694. It could add, and, after changing some gadget around, multiply. Leinbniz invented a special stepped gear

mechanism for introducing the addend digit, and this still being used. Thomas of Colmar created the first successful mechanical calculator that could add, subtract, multiply and divide. By 1890, a range of improved desktop calculators were available (Mayer, 2001; Shelly et. al, 2004).

Electronic information processing has, therefore, been evolved through several identifiable phases. Beekman(1999) while discussing about the development history of IT says that while the computer has been with us for only half a century, its roots go back to a time long before Charles Babbage conceived of the Analytical Engine in 1823, which served as a blueprint for the first real programmable computer a century later. Virtually every computer in use today follows the basic plan laid out by Babbage but with more modest goals. Between 1850 and 1900 great advances were made in mathematical physics, and it came to be known that most observable dynamic phenomena can be identified by different equations. A step towards automated computing was the development of punch cards, which were first successfully used with computers in 1890 by Herman Hollerith and James Powers, who worked for the US Census Bureau. The start of World War II produced a large need for computer capacity, especially for the military. In 1939 a young German engineer named Konard Zuse finalized the first programmable general-purpose computer but military establishment didn’t welcome him.

In 1943 a British mathematician Alan Turing and others, designed “Colossus”, considered by many to be the first electronic digital computers. John Atanasoff, of U.S, invented first high speed electronic digital computer , the Atanasoff Berry Computer (ABC) in 1939, providing the foundation for advances in electronic digital computer. The first general purpose commercial computer ENIAC(Electrical Numerical Integrator And Computer) was invented in 1942 by Eckert and Mauchly and was used from 1946-1955. This group of computer included EDVAC and UNIVAC(Universal Automatic Computer)-the first commercially available computer. Until that time computer had been found in labs for scientific and defense work. Computer hardware evolved rapidly from those early days, with new technologies replacing old every few years(Beekman, 1999; Shelly et. al. 2004).

Historian & Researchers have marked the development of IT in four generations. Laudon & Laudon(1998) narrate that in the computer history the beginning years to the year 1950, is called the first generation of computers, which were based upon vacuum tube technology. These were very big in size, expensive and finicky and were affordable only by large corporations. The period from 1951 to 1960 is the period of second-generation computers, which were based upon transistors technology. These computers were radically smaller, more reliable, and less expensive than tube based computers. Mid 1960 to 1969 is the era of third generation computers, which were based upon silicon chip. These were smaller in size than second-generation computers but less expensive, more reliable, more accurate and had high speed. Microprocessors based computers (a complete computer housed on a tiny silicon chip) in 1969 replaced these third generation computers.

The invention of microprocessor marked the beginning of fourth generation of computer and for all practical purposes, the end of an era when it made sense to count computer generation. The microprocessor revolution didn’t just increase the number of computers in office but it also opened up entirely new possibilities for computer inhabitants.

Each generation of computer has dramatically expanded computer processing power and storage capabilities while simultaneously lowering costs. Rynolds (1995) points out that the cost of performing 100,000 calculations plunged from several dollars in the 1950s to less than $0.025 in the 1980s and approximately $.00004 in 1995. These generational changes in computer hardware have been accompanied by generation changes in computer software that have made computers increasingly more powerful, inexpensive, and easy to use. Over the last 30 years, computing costs have been dropped by a factor of 10 each decade and capacity has increased by a factor of at least 100 each decade. Today’s microprocessors can put a mainframe on a desktop, and eventually into a briefcase or shirt pocket (Laudon & Laudon, 2005). It is possible to distinguish historically three phases in the development of commercial computer systems, roughly correlated with the declining cost of computer hardware and the development of data communications. Phase one dates from the beginning of modern data processing in early

1960s. It involves centralized computing: an expensive main frame housed in a data center. Phase two, dating from the early 1970s is decentralized computing: the data center is augmented by minicomputers in departments and subsidiaries connected to the mainframe by telecommunications lines. Phase three is distributed cooperative computing where computers of various sizes are linked by a network and cooperate to process a company’s data. Cooperative processing is the basis of the computer-integrated company (Cane, 1992).

Figure 2.1 shows graphically how computer-processing power has grown, particularly during the last two decades of the 20th century. More importantly, this growth will not come to an end when “Moore’s Law”1 on integrated circuit growth runs its course in 2020 ( when silicon based chip technology will have reached its operational limits).

Figure 2.1 The Exponential growth of computing 1900-2100

Source: Kurzweil (1999) pp104

1 In 1965 Gordon Moore, the Chairman of Intel, predicted in jest that the power of a silicon chip of the same price would double about every eighteen months and will continue to hold for another two decades. So far Moore’s prediction has been uncannily accurate. (Beekman & George, 1996). pp7. Gilders law predicts that doubling of communication power every 6 months due to the advances in fiber optic technology. Varian(2001).

Recent Developments 2.1.2.2. Information Technology is the outgrowth of the microelectronics revolution and is one of the advanced and fast growing technology of the world. The modern data processing business dates from about 1963 when International Business Machine (IBM), already a leader in mainframe computer systems, introduced system/360, a family of machines that was broadly compatible and which had the facility to use the same operating software. The computer became more central to business operations with the evolution of the minicomputer in the early 1970s. The microprocessor’s invention caused immediate and radical changes in the appearance, capability, and availability of computer(Cane, 1992; Shelly et. al, 2004).

The microcomputer revolution began in the mid 1970s when companies like Apple, Tandy, and Commodore introduced low cost, typewriter sized computers as powerful as many of the room-sized computers that had come before. Major developments in the 1970s included microcomputers, interactive display devices, price tags on different items, user friendly software and improvements in data base technology. Personal computers, or PC, as microcomputers have come to be known, are now commons in offices, factories, home, schools, and just about everywhere. IBM released the very first PC in 1981 and then there is a great boom by different companies. The 1950s and 1960s represented an ear of institutional computing, 1960 to 1995 was a personal computing era but now it is interpersonal computing era and computerization is found everywhere. Today’s world is familiar with the variety of computers, each particularly well suited to specific tasks and are classified as super computer, main frames, minicomputer(mid range servers) and micro computers but revenues from personal computers are greater than those from every other kind of computer systems (Frenzel, 1999).

The term electronic data processing (EDP) was frequently used to describe business computing environments of the 1990s. As computers became more common, the “electronic” and “automated” adjectives were looked upon as redundant, and the term data processing (DP) evolved to describe both types of applications. The development and refinement of operating systems (the programs that manage and control the

operations of computer equipment) enabled computers to run with less manual intervention. Also entering jobs from terminals at remote sites became commonplace. In general, people began to accept computers and to rely on the outputs that they produced. Each of these development-and others-contributed to the rise of the so-called management information system(MIS). During the 1960s and 1970s, this term was used in a very limited way to apply to the set of programs that generated periodic printed reports(Oldach et.al, 1993). The Figure 2.2 shows the development history of computers over time.

Spilling and Lundh (2004) observed that the concept of computer networking started in the early 1960s. The invention of timesharing in the 1960s allowed multiple users to connect to a single computer through LAN (Local area network), WAN (Wide area network) etc., to share common resources and information. A few visionary computer scientists and engineers, with financial backing from the U.S. government, built an experimental network called ARPANET2 in 1960. This groundbreaking network would become the INTERNET—the global collection of networks that is radically transforming the way the world uses computers (Spilling & Lundh, 2004).

The development in Internet technology continued and in 1990s Internet software took giant leaps forward in usability. The biggest changes came with the development of the World Wide Web (WWW)3 in 1991 by Tim Berners-Lee, a vast tract of the Internet accessible to just about anyone who could point to buttons on a computer screen (Shelly et. al, 2004). The Web4, as it often called, led the Internet’s transformation from a text- only environment into multimedia landscape incorporating pictures, animation, sound, and even video. Millions of peoples connected to the Web each day through Web browser -easy to use software programs that, in effect, serve as a portal into the Web’s information space. The Internet today is not just for scholars and scientists, it is used by mom and pop business and multinational corporations who want communication with

2 Advanced Research Project Agency Net Work. Of U.S. Defense department(Spilling & Lundh, 2004). 3 The World Wide Web is made up of millions of interlinked documents called Web pages. Some Web pages are stand-alone; others are grouped in related collections called Web sites. Some Web sites are commercial enterprises; others are educational; still others are just for fun(Laudon and Laudon, 2004). 4 The first net browser called MOSAIC was launched in 1993(Shelly et. al, 2004).

their stakeholders (Gasos and Thoben, 2003). The Internet has become so pervasive that now many organizations are rebuilding their entire information-processing systems around Internet technology by replacing their old mainframe and PC-based systems. Vinton Cerf, who is commonly regarded as the father of Internet says that “it is very clear that the Internet now is playing an important role in the growth of business” (Savoie and Raisinghani,1999). Indeed the world is on the verge of creating a whole new generation of personal digital assistant-PDAs, smart cards and others-that will make use of digital information pervasive primarily due to the improvement in Internet technologies that are giving us worldwide connectivity (Varian, 2002). The proliferation of computers and networks today is transforming the world rapidly and irreversibly.

E-Commerce(EC)5 now is replacing the traditional commerce(Segars and Grover, 1995). Savoie and Raisinghani(1999) comment that the widespread use of the Internet and related technologies is dramatically reducing transaction costs, leading to a growth in e- Commerce and productivity and increases in profits.

It can be concluded from all above discussions that over the past four decades, both the variety and diversity of information systems technology and also its uses have been changed accordingly. From 1950s to mid-1960s (The first and second generation of computer hardware and software technologies) the computer was used primarily for data processing. In 1970s computer technologies evolved into third and fourth generations and use shifted to management information systems. With the arrival of microprocessor and network technologies in 1980s, the information systems expanded beyond the earlier parameters to integrate with an organization’s information-service functions, systems and technologies to enhance office automation, which includes word processing, e-mail, facsimile, desktop publishing and other computer and communication based technologies.

5 E-Commerce is a generic term for application of IT. It is a commercial activity that takes place by means of connected computers. It is buying and selling of the goods and services on the internet, especially World Wide Web. It is Online shopping via Internet or doing online transactions on internet. Source (www.whatis.com/ E- commerce. htm, e-commerce Premier, http/devshed.com) & Ray & Achariya(2004).

Figure 2.2: Development history of IT over years: Source Beekman (1999). pp16

The integration of these systems and technologies within a single office setting is now commonly called an office information systems(OIS). From the 1990s, IT is playing a vital role in the achievement of a wide range of business objectives. IT has become increasingly pervasive in society now. It has spread to the point that nearly everyone uses some form of IT every day. It has become common in schools, libraries, homes, offices, and shops.

The Internet and the World Wide Web have particularly contributed a lot to the rapid expansion of IT. Thomas Wantson, Sr., the founding father of IBM, delivered in 1953 that the world wouldn’t need more than five computers to work all around and now it is reality that it’s an era of technology revolution. Bill Gate’s of Microsoft (1999) prediction that “this century would be full of cataclysmic technological changes, particularly in the area of information and communication and business is going to change more in the next ten years than it has in the last fifty years”, is becoming true.

IT is the technology of the present and of future too. There is a flow of digital information. The standard hardware combined with a standard software platform have created economies of scale that make powerful computing solutions available at affordable prices to companies of all sizes now. The growth in IT is still continued and it is perceived that it would take new shape in the future to come.

Section 2

Organizational Performance

Definign Organizational Performance 2.2.1. Management as defined by Robbin and Coulter(2003), is the process of getting activities completed efficiently and effectively with and through other peoples. The process represents the functions or primary activities engaged in by manager. These functions are typically labeled planning, organizing, leading, and controlling. Each organization has certain objectives and main objective of every organization is to earn profits by increasing performance. According to Gilgeous and Gilgeous(2001), the main business objectives can be achieved through the use of range of different “initiatives”. They define initiatives as company programs that directly support the achievement of the main objective of getting high performance. According to them these initiative are 1) Innovation and change 2) Empowerment 3) Customer focus and commitment 4) Commitment to quality 5) Win-win relationship with suppliers 6) The learning organization 7) Re-engineering and 8) Technology & information systems. Gilgeous & Gilgeous(2001) stress that last of the above mentioned initiatives i.e Information Technology, contributes a lot for use of other initiatives for achievement of main business objectives. Almost all the managers at all levels, in all kinds of firms, and in all kinds of industries are using IT now to improve their performance.

Sushil and Agrawal(2003) discuss that organizations are now composed of five major components: IT, organizational structure & corporate culture, management & business processes, organization’s strategy, individuals and roles. These components are in stable condition, called equilibrium, as long as no significant changes occur in the environment or in any of the components. However, as soon as a significant change occurs, the systems become unstable and it is necessary to adjust some or all of the internal components since all are inter-related. Unstable organizations may be unable to excel or even survive, therefore, organizations need to respond by what it is called critical response activities, which deal not only with long term strategies, but also with the basic

daily business activities. Now IT has become a major facilitator of business activities in the world today to make organizations responsive and remain stable(Mandel et. al, 1994).

Assessment of organizational performance 2.2.2 The performance as stated by Wheelen and Hunger(2000) is an end result of an activity and an organizational performance is accumulated end result of all the organization’s work process and activities. Managers measure and control organization performance because it leads to better asset management, to an increased ability to provide customer value, to improve measures of organizational knowledge and measure of organizational performance do have an impact on an organization’s reputation. When the performance of the organization is assessed, the past management decisions that shaped investments, operations and financing are measured to know weather all resources were used effectively, weather the profitability of the business met or even exceeded expectations, and weather financing choice were made prudently.The most frequently used organizational performance measures include organization efficiency(productivity), organizational effectiveness and industry ranking (Wetherbe et. al. 1999). The following discussion gives a clear understanding of these measures.

Management Efficiency 2.2.2.1 According to Robbins & Coulter(2003) the word ‘Efficiency’ entered in the management lexicon about a hundred years ago by Harrington Emerson, an engineer and management consultant, who worked with the father of scientific management, Fredrick Winslow Taylor. Actually, the ideas of two men were quite separate and distinct. Taylor’s scientific management system was based on concept what is now called technical efficiency: break work down into its separate component tasks, then re-engineer each task to the optimum performance level. Emerson, who referred to his own set of ideas as the ‘efficiency system’, saw efficiency as a natural rather than a mechanical concept.

In the academic literature efficiency is defined by many ways, Witzel(1998) for example looks at the origin of the term and finds that it has two meanings: technical efficiency or

ensuring that systems and process work to their optimal level, and total efficiency, or ensuring that the organization as a whole is fit to meets its goals.

Edwards(2001) defines it that “Efficiency is minimum utilization of resources and getting maximum output”. It is getting the least amount of input and getting high outputs bettered to as doing things right. Aldag and Stearns(1987) define efficiency by cost point of view that “Efficiency is the relationship between inputs and outputs, seeks to minimize resource costs.” Druker(1982) defines efficiency as “It is doing job successfully without wasting time or energy. Efficiency means compatibility between inputs and outputs. It is saving time, money or efforts”

In economics, efficiency is also defined in a number of ways. The one which is commercially used is referred as the “Pareto-Koopman’s” definition which is articulated as “A Decision Making Unit (DMU)-firm, institution, hospital is efficient if and only if it is not possible to improve some of its inputs or outputs without worsening of some of its other inputs or outputs”. A Decision Making Unit is technical efficient if it “either maximizes output for a given amount of input Or minimizes input to achieve a given level of output”(Anderson, 1986). Modern Economists define it, as “Efficiencies require that any given output is produce at minimal cost, which means that both waste and technological inefficiencies are avoided and that appropriate input is used to find the cost minimizing production process”. In other words efficiency of a production unit means a comparison between the observed and the optimal values of its outputs and inputs.

Daft(1999) argues that the term productivity is commonly used as a synonym for efficiency. However, productivity specifically refers to the efficiency of human resources. Productivity improves when fewer workers are required to produce same amount of output, or, alternately, when the same number of workers produces a large number output.

So to conclude, it can be said that since managers deal with input resources that are scare- mainly peoples, money, and equipment-they are concerned with the efficient use of these

resources. Management therefore is concerned with minimizing resources costs. Management efficiency, therefore, is the degree to which organizational resources contribute to productivity. The proportion of total organizational resources used during the production process measures the efficiency. Higher this proportion is the more efficient is the management.

Types Of Efficiency 2.2.2.2. There are many types of efficiency and many methods to measure it. Before outlining the different methods to measure efficiency, it is necessary to first look at the number of types of efficiency and the way they relates to each other. Terms used to measure the efficiency are cost efficiency and X-efficiency. These are concisely described as under: Cost efficiency means that a firm minimizes its expenditures given the services it provides without reducing the service quality. X efficiency can also be termed as over all efficiency(Nunamaker, 1985).

Overall efficiency means that the cost of producing observed output of both technical and allocative efficiencies are assumed relative to observed cost (Forsand, and Sarafoglou, 1998). They used the term overall efficiency for all technical and allocative efficiencies of individual firms distinguishing from scale and scope efficiencies. It can further be decomposed into technical efficiency and allocative efficiency. Allocative efficiency measurement is the extent to which inputs choices of a firm fail to satisfy the marginal equivalences for cost minimization.

The technical efficiency as defined by Nunamaker(1985) that “a firm is technical efficient if it can produce existing level of output with at least one less unit of input, or with existing inputs it can produce at least one more output”. Technical efficiency can further decomposed into scale efficiency and pure technical efficiency. Scale efficiency is defined relatively to the form of the locus of technical efficiency production plans. It is investigated by analysis of the shape of the frontier. Pure technical efficiency can be obtained by dividing the technical efficiency by scale efficiency. Pure technical efficiency is composed of congestion efficiency and other effects.

The congestion efficiency is the measure of the component of pure technical efficiency due to the existence of negative marginal returns to input and inability of a firm to dispose of unwanted input costlessly. The following diagram sets out the progression of efficiency measures outlined above.

Figure 2.3 A road map of efficiency decomposition Economic/cost/overall Efficiency

Allocative efficiency Technical efficiency

Scale efficiency Non scale or Pure technical efficiency

Non congestion efficiency Congestion efficiency

Measuring Efficiency 2.2.2.3 Efficiency can be measured by many ways. The organizational efficiency is a measure of the "productivity" of the aid intervention process, i.e. to what degree the outputs achieved derive from efficient use of financial, human and material resources. In principle, then, it means comparing outputs against inputs. It takes the limited operational perspective of the key implementing institutions. Broadly speaking, assessment of organizational efficiency can be drawn from two types of data i.e. 1) Performance indicators, which measure specific factors thought to provide a partial reflection of underlying efficiency 2) Comprehensive measures, designed to provide an indication of overall organizational efficiency(Tofallis, 1999). In a project, efficiency will be measured as an aggregate of the efficiency associated with individual outputs. In larger evaluations at sector or country level the efficiency will have to be expressed as an aggregate of the efficiency associated with all the aid interventions involved. This study measures the

efficiency of the organization by applying both of the above types of data by applying financial and statistical techniques.

Management Effectiveness 2.2.2.4 Many authors have defined effectiveness in many ways. McClenahen (2000) says that “Effectiveness means how well the job gets done”. He also defines effectiveness in an other way that “It is extent to which an organization realizes its goal”. Oz (2002) defines effectiveness, as “It is the degree to which a goal is achieved”.

According to Robbins and Coulter(2002) “Effectiveness is “doing the right things” to achieve organization goal. Laurindo and Shimizu(2000) narrate that “effectiveness is a measure of the extent to which the formally agreed objectives have been achieved, or can be expected to be achieved. It takes the perspective of the users or those formally designated as the beneficiaries of the aid interventions: the target group”.

To conclude it can be said that effectiveness can be understood as the ability to “do the right things” to achieve the organization objectives.

Approaches For Assessing Organizational Effectiveness. 2.2.2.5. As compare to assessment of efficiency, it is difficult to assess the organizations’ effectiveness. Yuchtman and Seashore(1967) in an early study narrated that comparing intended goal performance with actual goal performance is perhaps the most common method to assess the organization effectiveness. Other ways to evaluate organizational effectiveness as narrated by Aldag & Stearns(1997) and Robbin & Coulter(2004) include examining an organization’s ability to acquire the resources it needs, operate in a smooth and efficient manner, optimize goals, and satisfy external constituencies who have an interest in the organization. Each of these approaches is discussed below separately.

System Resource Assessment. 2.2.2.5.1. The systems resource assessment of organizational effectiveness is an approach, which examines the performance of the organization in acquiring the resources it needs. Measures and evaluations of effectiveness in this approach come from assessing the organization’s ability to obtain necessary inputs for transformation into a product or service. An inability to acquire necessary inputs will constrain or curtail organizational activities. This approach includes two important assessments: 1) the amount of resources acquired from the external environment, and 2) the bargaining position the organization has with resource providers in the external environment. The first assessment directs managers to goals that will increase resource acquisition and the second assessment directs manager attention to goals that will optimize the bargaining position with suppliers.

Internal Process Assessment. 2.2.2.5.2 The internal process assessment of organizational effectiveness focuses on goals related to productivity and member development. The organization is evaluated in term of production efficiency, integration of departmental activities, satisfaction of members, and level of conflict within the organization. In other words effective organization from an internal process assessment is one that operates smoothly and efficiently without cost disruptions. Internal process assessment is concerned with both production efficiency goals and member goals. Thus manager make decisions concerning the tradeoffs between competing goals in order to maximize effectiveness.

Goal Assessment. 2.2.2.5.3 Goal assessment focuses on the outputs of the organization. Outputs are the products or services that the organization produces to distribute to consumers in the environment. Output goals are usually described in terms of sales growth, market share, volume, revenues, or profits. Effectiveness is achieved when the organization has attained the desired level or target of the output goal. Many organizations evaluate their effectiveness of output by comparing current goal achievement with goal achievement from a prior period or by comparing goal achievement to that of organization with which they compete.

Strategic Constituency Assessment 2.2.2.5.4 A strategic constituency assessment of organizational effectiveness places less emphasis on the inputs, the outputs, and the internal processes of organization and more emphasis on groups that have a stake in the organization. A strategic constituency is any group internal or external to the organization that has more than a passing interest in how the organization performs. Stockholders, owners, creditors, suppliers, employees, communities, and customers can all be considered to be strategic constituencies of an organization. In this respect, effectiveness is determined by the degree to which the organization satisfies the expectations and demands of all these groups.

A strategic constituency assessment of organizational effectiveness is usually more difficult to make the assessment using the system resource, internal processes, and goal assessment approaches. As each groups can very widely in their expectations and demands on the organization. Often the demands and expectations of these groups are inconsistent and contradictory, which reduces an organization’s ability to be effective.

Comparison Of Approaches Of Assessing Effectiveness. 2.2.2.6 Stress(1986) outlined a detailed comparison of all the above approaches of measuring effectiveness. He says that managers are usually interested in assessing organizational effectiveness by all four approaches. At times, managers may focus on one type of assessment, depending on circumstances. For instance, when inputs are difficult to obtain due to a lean resource environment, managers may emphasize systems resource assessment. A drop in production efficiencies may direct managers to an assessment of internal processes. Decline sales would require an assessment of output goals. A lessening of satisfaction among stockholders and communities would encourage an evaluation of strategic constituencies. Regardless, organization managers must recognize that the four different assessments of organizational effectiveness are interrelated. Adjustments of goals in one approach may require adjustments in other approaches to effectiveness. Although each of this approach may have merit in measuring certain aspects of organizational effectiveness, the bottom line for managers continues to be how well the organization accomplishes its goals. That’s what guides managerial decisions in

designing strategies, work processes, and work activities, an in coordinating the work of employees.

Relation Between Efficiency And Effectiveness 2.2.2.7 Walrad & Moss(1993) state that efficiency and effectiveness do not means the same thing. In fact, they are often natural enemies. Often one can have one, or the other, but not both (Unless one is lucky or one want to spend a lot of money). Being efficient means that one spends less time on something, one spends less money on something or one spends less efforts (or number of workers) on something. Being effective means that one does his job well. In other words, the output (finished product) is of high quality. It is a rare and delightful occasion where a solution to a problem is both efficient and effectiveness; one usually has to decide which he prefers, because one usually cannot have both. Efficiency and effectiveness can be entirely unrelated, so as their measurement.

Oz(2005) says that one may assume that organizational effectiveness can be determined by comparing the actual performance with the intended performance for each goals and totaling the results. However this would not provide a manager with an accurate picture of overall effectiveness. For instance, the organization may achieve the goal of increased market share, product innovation, product quality, consumer satisfaction, and social responsibility. Yet, the organization may fail miserably at achieving the goals of profitability, forcing the organization into bankruptcy. As the organizational goals are not necessarily equal in importance and their importance can fluctuate over time. In addition, a measure of organizational effectiveness must incorporate factors both inside and outside the organization. If the organization were to achieve the goal of high profits at the expense of consumer satisfaction, managers of other organizations might conclude that the organization is ineffective and decide to enter the industry. Thus, the diversity and inequality of organizational goals make measurement of effectiveness a highly complex problem.

Seddon et. al(2003) say that efficiency is less problematic for managers to assess in most organization. Organization efficiency as defined in above discussions is the ratio of an organization’s outputs to its inputs. Inputs consist of raw material, labor, and capital. Outputs consist of products or services. When compared to similar organizations, an organization is considered more efficient when fewer inputs are used to achieve an equivalent number of outputs. Thus, efficiency is an internal measure of organization performance which focuses on how the organization achieves its goals rather than whether the organization achieve its goal.

To sum it up it can be said that generally measures of efficiency are related to organizational effectiveness, as reduced costs in production can enhance the survival of the organization. For example, in a road project, effectiveness could be measured in terms of traffic flow, or transport of different commodities and the users of the road. In a sector programme to support agriculture, effectiveness could be measured in terms of the scope of productive investments made by the farmers involved, development of human resources through training and institutional development in the sector. In an IT context effectiveness, is the measurement of the capacity of the outputs of information systems or of an IT application to fulfill the requirements of the company and to achieve its goals, making this company more competitive. Whereas, in the same road project efficiency is measured in terms of the construction of the road (the physical output); based on its quality, cost and the timeliness of construction. In an IT project it could be measured that how cheaply can you get things done, and are the people to whom you provide IT services (the stakeholders) happy with the levels of service being delivered? and does it reduced the operational expenses?. This study measured both efficency and effectiveness of the organization and all this is refered to, in all the ensuing discussions as an organizational performance. In all following discussions word ‘performance’ represents both efficiency and effectiveness.

Section 3

Information Technology and Organizational Performance

IT impact on Management Perfromance: AN Overview 2.3.1. Various studies have been undertaken to observe the important role IT plays in business organizations. The researchers have been studying IT impact on management performance since long. For example in an early empirical study, Boddy and Buchanan and Boddy(1983) found that IT produces significant productivity gains at the operational level. IT is a variable that can enhance the timeliness and quality of organizational intelligence and decision-making promoting organizational performance (Huber, 1990). Parthasarthy and Sethi(1993) found that flexible manufacturing technology has significant impact upon a firms’ cost and quality performance. Later, Kelley (1994) verified that IT is positively related to production efficiency and productivity. Few of the other studies which confirm IT’s positive influence upon aspects of corporate financial performance, such as return on investment are the studies conducted by Mahmood and Mann(1993) and Byrd and Marshall(1997) etc. Earls(1996) also notes that the efficient performance of an organization is dependant very much on the internal performance of the organization resources and IT plays an important role for right utilization of these resources.

Rumizen(1998) confirms that the IT applications help workers to produce more in less time. The closer the result of an effort is to the ultimate goal, the more effective are the effort. The fewer the resources spread on achieving a goal, the more efficient the effort and IT does this job. Rumizen(1998) also argues that IT is used to speed communications between trading partners, shorten product life cycle, establishing better relationships with customers, suppliers and partners and to reduces expenditures.

Oz(2005) in his recent research found that IT contribute both to the effectiveness and efficiency of business, especially when positioned in specific business functions, such as accounting, finance, production and engineering. When IT is used it helps companies achieve their goals more quickly by facilitating collaborative products and services accessible, they can make innovative products and services accessible such as Web-based

customer service available 24 hours per day, 365 days per year. IT can shorten routine processes, such as issuing purchase orders; and it can improve an organization’s strategic position, such as maintaining a Web site for selling products directly to consumers before the competitor does.

According to Laudon and Laudon(2005), from an economic standpoint, IT can be viewed as a factor of production that can be freely substituted for capital and labor. As the cost of IT falls, it is substituted for labor, which historically has been raising cost. IT, especially the use of networks, can help firms lower the cost of market participation (Transaction costs), making it worthwhile for firms to contract with external suppliers instead of using internal sources. It is remarkable contribution of IT as according to transaction cost theory6, firms and individuals seek to economize on transaction costs, much as they do on production costs. Traditionally, firms have made efferts to reduce transaction costs by getting bigger, hiring more employees, or buying their own suppliers and distributors, but now IT is helping the firms contract in size through networks and reduce transaction costs. IT also can reduce internal management costs(Agency Cost) by reducing the costs of acquiring and analyzing information, because it becomes easier for managers to oversee a greater number of employees (Laudon & Laudon, 2005).

The IT as being a modern management tool helps the manager now in various ways to efficiently deploying the organization resources and to become more efficient. Dewett and Jones(2001) demonstrates that though IT has revolutionized the working of organizations over the past half-century, but its impact on increasing organization efficiency for the last decade are tremendous. The availability and use of information systems and technologies have grown enormously over the last decade.

A large number of researchers have also highlighted various other vibrant reasons of introducing IT in organizations. Anderson(1986), for example, outlined that IT is used into an organization a) to save time and money b) to improve information handling and

6 Economic theory stating that firms grows larger because they can conduct marketplace transactions internally more cheaply than they can with external firms in the market place.

provision c) to increase revenue d) to improve the competitive position of the business e) to expand the business by enabling easy interaction between business units at different geographical locations. Oldach et. al(1993) argue that IT has become the generally accepted term that encompasses the rapidly expanding range of equipment (computers, data storage devices, network and communications devices), application, and services (e.g., end-user computing, help desk, application development) used by organizations to deliver data, information, and knowledge. IT provides strategic value to all parts of the business. Support of the administrative infrastructure (responsibilities and authority structure of the enterprise), key business processes (how important business functions operate or flow), and operational skills (day to day support of staff) represent three significant areas where IT is used to reduce costs, enhance product and service quality, improve customer service, integrate supplier and customer operations, and enable organizational learning(Oldach at al, 1993).

Moreton and Chester(1997) note that the efficiency through IT can be achieved because it can enable information sharing, support business processes and transactions and link customer’s information. By applying IT, the organizations can have closer links with suppliers, customers and other business partners and IT can also have strong influence on the bargaining relations between buyers and sellers.

Ives and Jarvenpaa(1999) emphasize that global information sharing through IT has increased firm’s efficiency. IT assisted many companies in meeting the need to convert from an international organization into a global organization. With the rapid development in broadband communication technologies, global virtual teams are now increasing in popularity and are considered the most effective decision-making mechanisms in new product development process, conduct joint research and development, plot new business strategies, and do any work traditionally required face-to-face meetings, thus it is facilitating firms’ globalization activities.

Olalla and Fassas(2000) indicate some more reasons for IT introduction in organizations, these are 1) cost savings and improving the accuracy of exchanging information 2)

avoiding human mistakes inherent when complex repetitive tasks are used 3) saving money by reducing time and errors 4) integration of several functions 5) improving organization’s efficiency and effectiveness by eliminating delay, administrative intermediaries and redundant processing steps and by providing better access and information. According to Dewett and Jones(2001), IT is being deployed in the firms because 1) it makes links and enabling employees through electronic communications. Through IT, employees can interact with each other and it has promoted horizontal communication, which results in increased alienation of employees and increasing their efficiency. 2) it also increases boundary spanning. An individual can access desired information in any part of the organization with the aid of IT. This eliminates the need for the repetition of information and thus promotes non-redundancy. Corporate databases attached to telecommunications networks allow employees around the world to access data on customers, products, and services. 3) manager can communicate with employees and each other more easily. The teamwork and group collaboration is also made easier. Information can also be stored, retrieved and communicated far more easily and effectively through IT.

Dewett and Jones (2001) further say that IT not only has provided operational benefits to the managers but it has also greatly facilitated organizational memory which is subject to erosion and error. Organizational information is easier to store, retrieve, communicate, codify and assimilate with IT. Expert systems are good examples of IT systems that memorize facts. Also, the amount of information that is available to the organization is increased significantly by the use of IT particularly the Internet. Greengard(1998) also asserts that the developments in the information and communication technology sector have now made it easier and cheaper to store, reuse and share valuable information than have to reinvent it as it is needed.

Schmidt et. al(2001) submit that IT improves customer relations. IT benefits customers as it initiates the need to improve the company’s competitiveness. For example, it enables quick responses to customer’s need. Moreover, they add, that IT facilitates a wider availability of information about products and services. This is increasingly important to

customers as it facilitates a lower cost for the customer to switch between suppliers, obtaining products specifications or information on services offered via the Internet is an example. Information Technology has become the most pervasive technology of this time

Zee(2004) found in his research that the higher management performance in the organization is achieved through business activities, grouped together in business process and through the organization and allocation of resources to these business processes. He reports that IT is playing an important role in all business processes now. The business performance is attained through well-designed business activities that need to be changed as per requirement of customer and market need. IT now is an important tool for organization change and efficiency, for business process reengineering for effectively supporting all business processes activities and employees. The ensuing discussion elaborates the IT role in increasing business processes activitiesc in detail.

2.3.2 IT and Business Processes 2.3.2.1 IT as Strategic Weapon.

Karake(1999) linked up the revolution in IT to the industrial revolution in terms of its potential scope and impact on society. He adds that now it has been called the digital revolution or it can be refered to as the Network Economy. But whatever it is called, there is no denying that a veritable tide wave of IT is rolling across the business landscape. Caught up in the undertow, the competitive terrain is being reshaped, with the new companies arising, market leaders capsizing, and new industries being uncovered. Another researcher Bhatt(2000) asserts that today IT is an essential tool. It’s no longer support functions. It’s a fundamental part of business. Only a few years ago IT was treated by many in the boardroom as a mere servant that helped companies to automate tasks. No more “Not too long ago IT was viewed as a support system to business, today IT is a strategic weapon. During the short span of time it has acquired momentous place in almost all aspect of human life. Oldach et al.(1993) submit that using IT for strategic advantage implies the application of IT to enable strategies that enhance the

critical success factors or core competencies, or both of the business. Here, IT can be used to strengthening the business in achieving its objectives (e.g., systems and technical infrastructure or architecture are in place to support the business by providing the opportunity to compete, improve productivity and quality, and enable new ways of managing and organizing). Strategic advantage is represented by the ability of the IT function to effect the choice that determine the infrastructure and processes of the organization to run the business better.

Rockart and Short(1999) put forward their views regarding this discussion that business needs are incessantly driving the demands for increased capabilities of IT. In turn, increasingly advanced IT is being utilized in more and more sophisticated ways by the businesses to outdo competitions. Porter and Miller(1985) also state that IT is transforming the nature of competition, by restructuring the industry. IT, which is being deployed as a solution to the increased complexity and uncertainty of the environment, has paradoxically contributed to the situation by “compressing time and distance”. Segars & Grover (1995) and Byrd(2001), in their longitudinal studies to see the impacts of IT on industry structure, found strong evidence that IT can restructure strategic groups, and thus improving a firm’s competitive position.

Chan(2000) discusses that IT has now taken new role to play in the organizations. IT with new innovations is now viewed as a change agent and has significant strategic position in the organization rather than performing support role. It is playing roles of 1) an initiator-an agent of change and it lets people recognize a powerful solution before seeking the problem it may solve, 2) a facilitator-it may serve as something to make work or a workload easier and 3) an enabler-as it offers the ability or the necessary assistance to accomplish something. It provides rapid processing and analytical capabilities, parallel access and information capture. Table 2.1 on next page shows these changing views of IT over time.

Table 2.1: Changing role of IT over the years: Source: James & Smith, 2003: pp171

Rameesh(2003) from his research concludes that strategic advantage of the organization is represented by the ability of the IT function to affect the choices that determine the infrastructure and process of the organization to run the business faster..

Leon and Leon(2002) submit their views in this regard by saying that IT can also deliver competitive advantage by being a proactive contributor to mission-critical systems. Here, IT can be used to create new marketing opportunities. In both cases (competitive advantage and strategic advantage), it is imperative that the company is at least as faster as its competitors are, in applying IT.

2.3.2.2 IT and Business Process Reengineering. Business process reengineering is a top down process driven approach managed by senior executives. It aims to improve performance by radical change in the system over short time period. It is an important tool / technique for organizational change and efficiency enhancement. It’s theme covers changing not only internal operations but also interactions with suppliers and customers external to the organizations(Gunasekaran and Nath, 1997).

Reengineering involves a change of mindset. It is defined by Hammer(1990) that “it is the fundamental analysis and design of every thing associated with a business to achieve dramatic performance improvement and the management of associated business”. Managers need information systems that distribute critical operating information enabling them to redirect, accelerate, and sharpen their planning, decision-making, and control. In another definition Hammer & Champy(1993) say that “reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic importance in critical contemporary reasons of performance, such as cost, quality, service and speed”. Huff(1992) indicates that the basic concept behind reengineering is to reorganize tasks with the aid of IT through greater automation of processes. Information Technology plays a key role in reengineering.

Cooper and Rondolph(2000) also point out that there are four enablers for reengineering i.e total quality management, human resources(workers), organization(structure & culture) and Information Technology. But IT is regarded as an important enabler in reengineering process among all as every application of IT is invariably accompanied by some organizational or human resources management changes(Love & Gunasekaran,1997; Davenport & Short,1990; Hammer,1990;Harrington1991). Using IT, organizations can make reassessments and can streamline their business processes to improve speed, service and quality. Technology removes limits to the way employees perform their work allowing companies to redefine the way work is done and ultimately achieve a competitive advantage for earning higher profits(Gordon, 2002). In an earlier study Hammer and Champy(2003) also pointed out that the real power of IT lies in its ability to enable an organization to break old rules and create new ways of working. IT serves as a facilitator in the reengineering of a process. IT can reduce the complexity of communicating effectively across organizations. Through the reengineering of strategic and value added business processes, done with the support and assistance of IT, the company can implement innovative and radical changes(Choi and Chan, 1997; Hall et.al, 1993). As it has been discussed above it

is very clear that IT plays a censorious role in reengineering. The IT staff acts as a catalyst in the reengineering process, providing input on what the limits of IT are and how to use it most effectively?.

Champy(2003) in his recent research found that company by restructuring, layoff or changing operations process, may reap the benefits of improved productivity and when combined with the power of IT, much of the productivity improvements are gained. Chapmy(2003) predicts that present and future productivity will come from the redesign of the process that operate between a company, its customers, suppliers, partners and possibly its competitors and he named this concept as X- Engineering. He further says that three principles are necessary for successful X- Engineering i.e. transparency, standardization and harmonization, and IT can make it possible.

2.3.2.3 IT and Organization Transformation Moreton and Chester(1997) have discussed another impact of IT on organizations by saying that “IT is a vital component in the transformation of an organization and crucially important”. Gouillart and Kelly(1995) define business transformation as “the simultaneously-although at different speed-along the four dimensions of reframing, restructuring, revitalization and renewal”. Farrbey et. al(1994) say that IT has power to transform organization and during this process IT increases the ability to change and to respond for immediate and direct economic benefits. It facilitates the streamlining of the administrative processes and enables the decentralization of the scope and scale of business. Morton(1998) also adds to this by saying that adoption of IT in an organization not only enable changes in the job routine itself but also lead to organization transformation. According to another researcher Meyer(1987) IT may not automatically transform organizations but it may act as instrument in accomplishing the organization transformation goals. Oldach et al.(1993) also note that IT has transformed the basic nature of many industries. IT is enabling business processes to be redesigned which aere were thought impractical or impossible.

Wetherbe et. al(1999) disclosed that the role of IT in transforming the enterprise is dependent on its perceived importance to the business as viewed by top management. The importance of IT is reflected in the way in which it participates in the strategy formulation process. The IT function has become more influential during the creation of business strategies and the trend now is to integrate IT into the formal strategy framework of organization.

2.3.2.4 IT and Innovations IT is also promoting innovations(Dewett & Jones,2001). Innovation as defined by Roger(1983) is “an idea, product, practice, or service that is perceived as new by the organization or the unit of adoption”, Dosi(1988) demonstrates that “an innovation is a process that allows the invention (new idea or new system) to be used in a particular context”. Myers et. al(1998) define innovation as “a complex activity that proceeds from the conceptualization of a new idea to solution of a problem and then to the actual utilization of economic or social value”. Another way to view innovation is to view it as the process of bringing any new problem- solving ideas into use”(Kanter, 1989). Daft(1999) broadly defines innovation in a way that “it is the intentional introduction and application within a role, group or organization of idea, processes, products or procedures new to the relevant unit of adoption designed to significantly beneficently benefit the individual, the group, organization or wider society”. According to Gilgeous and Gilgeous(2001) “an innovation may be something that never previously existed, or it could be some thing new to our own personal situation”, Spence(1994) describes innovation in these words that “an innovation could be an invention, something produced which is strikingly different to anything already in existence; however an innovation might be a fundamental change in practice because it puts an entirely different emphasis on well-established procedures”.

Dewett and Jones(2001) emphasize the role of IT in innovation in a way that, “IT is a major source of innovation because it brings new problem solving ideas into

the use of an organizations. The successful introduction of IT into organizational processes constitutes innovation, and the widespread and general acceptance of IT into organizational operations constitutes diffusion”. They elaborated that knowledge or information availability on its own will not lead to innovation. It is the ability to use the knowledge creativity that leads to innovation and thus gives competitive advantage. The design process of IT projects has traditionaly involved sequential phases(Dewan and Kraemier, 1998). Parallel processing and concurrent engineering is made possible through the application of IT. Employees are allowed to work simultaneously with continual interaction through electronic communication and this can promote innovation throughout the organization. The ability of IT to enhance a person’s domain relevant skills is also an indispensable part of the innovation process( Ray and Acharya, 2004).

Ray and Acharya(2004) further argue that IT facilitates a company to retain/gain operation efficiency by innovating different IT products for improve processes and enables improvements by process innovation for expediting the firms’ procedure, and allows the maintenance of high labor productivity through consolidation, for example, in the process of bank loan approval, IT products of document imaging enables the banks to process loan applications more efficiently as multiple employees are permitted to access the same documents simultaneously, if they wish. Also loan officers can use electronic documents to evaluate the customers’ credit history, employment status and loan eligibility, concurrently. Moreover, it helps to reduce the number of intermediate steps in these complex processes, allowing necessary tasks to be accomplished more independently and efficiently.

2.3.2.5 IT and Social & Economic Changes. Winter and Taylor(1996) recognized IT as a influential agent for social and economic change as it offer many new products and ways of doing the things. IT applications, such as shared databases, networking, and telecommunications, are able to meet the need for ever-closer coordination in the business arena. Shared

databases greatly ease the information dissemination process, providing an online environment for those who seek information as well as standardize the format in which all receive such information. While shared databases facilitate the distribution of information, networking assists both collection and dissemination. The former is a storehouse and the latter are exchange. For example, multinational firms, once constrained by geographical and technological limits, now enjoy the benefits of networking which enables round the clock exchange of information on production performance, among other things. Networking also facilitates rapid implementation of business decisions made at one level of an organization by permitting the timely conveyance of such decisions to all affected parties. Such communications takes place most commonly through telecommunication, such as voicemail, e-mail, or video and teleconferencing(Devenport, 1993).

Srinvasan and Jayarman(1999) effectively argue that now IT is not just having a support role. It is now becoming a change catalyst. Through time saving and efficient applications such as computer-aided design, IT is used simultaneously to coordinate the design directions among several functional participants and to begin the process of product design. Computer-Aided Systems Engineering (CASE) tools are another examples of aids that include a broad range of functions, including graphical modeling, data analysis and sharing, process analysis and modularity(Naisbitt & Abardene,1985).

IT has also become the tool used to manage change in business strategies and internal corporate processes by many companies (Poku and Vlosky, 2002). Gates(1997) considers IT as the nervous system of a company. Companies using IT are able to learn about the market, the competition, the internal and external customers, leveraging it for competitive advantage to increase market share and profits (Mahmood & Soon, 1991). Al-Ansari(1999) also observed in his research on Kuwait industries that in addition to the other factors, IT has also been one of the major factors causing changes in the way people communicate, locate, retrieve, process and use information.

As discussed IT provides a large number of benefits to the organization. The most commonly noted operational benefits of IT as discussed above ultimately are efficiency and productivity increase, cost reduction, customer satisfaction, product quality and profit improvement. Therefore, it can be resulted from above discussion that the use of IT has improved many facets of people lives. It permits them to perform a range of activities with greater efficiency by taking less time, incurring a lower cost or acquiring fewer efforts. With the help of IT, work may be completed by attaining greater accuracy. Long- term survival and growth of an organization can be achieved through an efficient and effective organization that satisfies all the needs of its customers and other stakeholder and IT plays an important role, in the internal functioning of organizations. IT is seen in all functions of the organization and it supports in all tasks performed by the managers. It helps managers in business processes of re-engineering, innovations, organization transformation and change management.

So, it is concluded that technology is no longer impediment in information-rich society, infact technology like IT is the important link to business success. Therefore, organizations should emphasize on IT’s relationship to coordination, control, and business performance. The business opportunities emerging through the development and application of IT are enormous, but it all depends upon managers of that organization that how efficiently and effectively they can reap benefits through IT by applying it properly in business processes of their organizations. AT the same time the managers also have to care about vulnerability of IT systems failures, misuse or errors. All in all IT is a powerfull toll for organizations’ success but at the same time it is needed to be managed/monitored carefully in the organizations.

IT and Management Functions

2.3.3. Managers play key and multiple roles in organizations. Their responsibilities range from minor to major tasks performed in the organization. While determining how IT can benefit managers, it is essential first to examine that what manager do in the organizations and what information they need for carrying out different jobs. A French industrialist Henri Fayol, in the early part of 20th century indicated that all managers perform five management functions in the organization i.e planning, organizing, command, coordinate, and control7. Later, Robbins and Coulter(2003) have grouped these five functions into four i.e. 1) planning 2)organizing 3) leading and 4) controlling. (Hitt and Brynjolfsson,1997) discusses that there is a vast difference between how traditional managers performed these functions, and how contemporary managers are doing so. The concept of traditional management has also been changed and contemporary management styles are more common now. Technology like IT has greater impact on managerial practice than before. It is beyond doubt that IT is playing a vital role in the changing process of management by providing powerful tolls for managers to carry out their all jobs efficiently and effectively(Hitt and Brynjolfsson,1997).

Buyukazkan(2003) has proved in his research that by using IT applications a manager can get increased accuracy, reduced cost of carrying out certain business operations, timely output, improved customer satisfaction, improved control of business, reduced errors, and faster availability of information among all units of business. They conclude that today IT is directly effecting on manager plan, decision making, organizing, leading and controling. The following discussions give an insight that how IT helps the managers to perform their organizational function in more effective ways.

7 In the mid 1950s, two professors at the University of California-Los Angeles drew upon Fayol’s work and used the functions of planning, organizing, staffing, directing and controlling as the framework for a textbook on management that was the most widely sold text book for 20 years. Koontz H. and O’Donnel C(1955), “Principles Of Management: An analysis of Managerial functions. McGraw-Hill, New York.

2.3.3.1. IT and Planning Planning as defined by Robbins and Coulter(2003) is the process of identifying the firms’ goals, establishing an overall strategy for achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. Planning and decision making have rightly been called the primary management tasks and these tasks occur at every level of management, although naturally the type of planning and decision making will vary between the levels. Chow(2001) says that IT is playing a vital role in planning process. Wide variety of software packages and computer programs are available to the managers in the organizations, which help them to store, retrieve and analyze information for making plans. According to Korson et. al(1992) IT helps managers in creating plans by defining the paths through which the organization’s goal can successively be achieved. Formal plans are made and are made available to other organizations’ members in the form of hard, soft and on-line copy. Hedlin and Allwood(2002) also highlight that in planning computers and Internet provide quick information, which are useful for top managers to make quick decisions. With the help of IT, today’s managers can accurately scan, forecast budget for correct planning. Software programs are also available for operational planning tools, which help a lot in applying scheduling, breakeven analysis, linear programming, queuing theory and probability theory etc. Among others simulation is the best example of computerized planning tools in which with the great help of a computer a model of real-world phenomenon is created and then manipulation of one or more variables is done in the model to assess their impacts(Ives & Jarvenpaa, 1999).

In order to provide appropriate information to different level manager, computerized management information systems are designed, which help different managers in planning and have profound effects on their working(Adeoti-Adekeye, 1997). In addition, managers of all levels can share information freely through integrated computer network, Intra and Internet, for making all type of plans. Therefore, it can be said overall that IT is a vital element

in planning, both in the design of product and services and in their development and distribution. Computer aided designing, computer aided manufacturing and computer aided planning are core to success of any today’s organization(Dewett & Jones(2001; Moreton & Chester (1997).

2.3.3.2. IT and Organizing Daft(1999) defines organizing in a way that “ organizing is to determine what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decision are to be made. Chandler(1962) in his early study defined structure as “the design of organization through which the enterprise is administered”. It maps out the logical relationship of hierarchical levels, formal communication channels and functional areas arranged in such a way as to enable effective achievement of the objectives and goal..

An early researcher named Woodward(1965) conducted a survey of 100 British manufacturing plants and indicated that organization structure tends to vary with the type of technology employed. In other words, certain structure appears to be more successful with certain kind of technology. Oil producing and refining companies for example are organized in a way that reflects the special technology of their operations. An automobile company, with its engine, parts and body plants and assembly lines is to be organized differently from the way railroads and airlines, with their different technologies, are organized. Nance(1992) investigated that with the introduction of IT traditional approaches to organizing work are being questioned and reevaluated as managers searched out structured designs that can best support and facilitate employees doing the organization’s work. IT always has affected organization’s structure. Technology is efficiently providing the facility to all managers that make organizational designs in a way that will support and facilitate employees. It has really become an easy task to organize with the help of IT. Olson(1982 notes that work specialization and larger span of control to reduce costs, cut overhead, speedup decision making, increase flexibility, get closer to customers, and empowering employees is possible now

with IT. Information Technology, by standardization of coordination would facilitate larger spans of control or work unit, which would be characterized by extensive lateral communication and self-contained authority structures.

Olson(1982) also narrates that IT may change lateral relations within the existing organizational structure, since communication across departmental boundaries are easier to establish. One might predict improved interdepartmental relations and increased accessibility of experts within an organization as a result of electronic communications. Olson(1982) further states that formal management may be adopted with more reliance on formal rules and procedures and less discrimination. Manager will also have more time for decisions and delivering more to organization.

Mckeen and Heather(2003) argue that new Information Technologies allow managers to handle more functions and widen their span of control. Fewer levels of management hierarchy are required, enabling companies to flatten the pyramid of today’s management structure. The new IT allows decentralization of decisions making without loss of management awareness; thus employee at all levels can be encouraged to be more creative and entrepreneurial. The key responsibility of the CEO will be leadership; to capture the light or energies of the organization like a lens and focus them on the key strategic objectives.

IT enables an organization to be more reactive and proactive in an environment. Ciborra(1997) describes how a shapeless organization employs IT to remain flexible in highly uncertain environments. For highly unstable environments, she advanced that the traditional environment structure linkage fails to create flexibility for organizations that are highly centralized and formalized. So to alleviate this tension created between the environment and structure, IT is implemented to provide organizations with greater flexibility, allowing them to process more information about the environment.

The findings of Dibrell and Miller(2002) confirm that IT has been a catalyst in the development of new forms of organization structure. IT has gone from a support mechanism to a substitute for organizational structures in the form of the shadow structure. The span of control and levels of the organization were each reduced through the introduction of computers to the organization. IT has allowed numerous organizations to reorganize several tasks through the automation of tasks. The reorganization of tasks resulted in a greater centralization of information. Another theme which is presented in Dibrell and Miller(2002) study is IT’s influence on the revolutionary rate of change in organizational structure. According to them within only the last 25 years, as organizations have adapted to the requirements of changing markets and technologies, there has been dramatic changes from the bureaucratic structure to the matrix, to the network, and now possibly to the shadow structure. Based on historical trends, the volatility of the environment is expected to increase, and, consequently, the demand for organization forms that can handle demands for increased information processing. Thus, one can reasonably project the continued application of advanced Information Technologies to future organizational designs. As manager strive to reduce the uncertainty of doing business in tomorrow’s market.

Bhatt(2000) demonstrates that IT has changed the traditional forms of organizational structure such as hierarchies are no longer appropriate. He further highlights the importance of communication technology by saying that IT has great effect on organizational design and has changed work patterns. Employee, teams or individuals need information to make decisions. IT has significantly affected the way organization members communicate, share information, and do their work. It has significantly improved a manager’s ability to monitor individuals or teams performance, and it has allowed employees to have more complete information to make faster decisions.

Buyukozkan(2004) while narrating the importance of an organizational information network also submits that the sharing of information among

organizational members is a fundamental requirement for effective management and IT has made it possible by providing the information manager need, in the desired format and when they need. The networked computer systems and wireless capabilities has enhanced organizational communication systems among members. The communication applications such as e-mail, voice-mail, facsimile, teleconferencing, video conferencing, electronic data interchange, intranets, internets etc. are giving greate help to managers for decisions making. Wireless products such as personal pagers, cellular phones, and specially equipped laptop computers are making it possible for peoples in organizations to be fully accessible to each others, at any time or any place now. Now employees don’t have to be at their desks with computers plugged in and turned on in order to communicate with others in the organization.

In short, IT permits simultaneous centralization-with-decentralization. The parts of an organization that are best suited to be centralized are centralized while other parts may be best rewarded by a decentralized approach. Homburg et al. (2000) discovered that IT enables an organization to employee a more decentralized structure, as employees are not geographically bound to projects within a local proximity. Lal(1994) and Hitt & Brynjolfsson(1997) also found that extensive use of IT has flattered and more decentralized organization structures. The same is observed by Michalak et al.(1999). They report that IT may influence the centralization/decentralization of decision making and control systems. New technology has typically resulted in a flatter organizational pyramid with fewer levels of management required.They further add that IT affects the nature of individual jobs and the formation and structure of work groups. There is a movement away from large scale centralized organization to smaller working units.

2.3.3.3. IT and leading Each and every organization is consisted of peoples, and management’s major job is to direct and coordinate these peoples. This is the function of leading. Leading also includes motivating subordinates, directing others, selecting the most

effective communication channels, and resolving conflicts(Strassman, 1985). IT is playing an important role in leading process as well. Paug(1986) puts forward a view that IT is motivating the employees or subordinates of an organization by clearly defining the outcome of their job. Due to various computer programs and using the information of the past this technology timely clarifies the outcome or result that gives motivation to employees for getting the work done. This results in greater performance and organization starts moving towards its goals speedily.

Besides this as Meyer(1986) also noted, IT professionals are more skilled and can better perform their work as compared to other employees. They are highly paid and rewarded due to their performance, and hence, they are appreciated. It ultimately gives them motivation to perform better for more rewards, positions and appreciations. Similarly, the managers or leaders having skills of IT can better communicate with their employees, since they have technical skills, therefore, they can influence their subordinates and can resolve their conflicts more rapidly and easily as compared to non IT base skilled managers. Managers with IT knowledge can effectively utilize expert and referent powers and are more regarded by their subordinates. It is therefore, concluded that IT has opened new possibilities for leading.

2.3.3.4. IT and Controlling. Controlling is to monitor activities to ensure that they are being accomplished as they were planned and correcting any significant deviation. Control is the means to determine wheather the organization’s goals and objectives are met(Robbins & Coulter, 2002). Information Technology has made this job smooth and more effective for the managers. IT is resulting in measuring actual performance, comparing and taking managerial actions to correct deviations through different systems. Attewell(1989) has talked about computerized monitoring that through video-cameras manager while sitting in his office can check the work and movements of all the employees and also can better alter security guards if any thing goes wrong. Evan(1999) also narrates that computer based application packages such as Microsoft Office programs are being used by the managers for

graphical presentations of the graph and charts of companies performance. Most computers are programmed to provide operators with immediate response, if an error is made. This helps the subordinates to monitor their own activities and to remove any disorder. Similarly, many organizational quality programs rely on concurrent controls to inform workers if their performance output and levels are of insufficient in quality and it ensure that quality standards are met.

McFarlan(1984) in this regard says that technological advances in computer hardware and software have made the process of controlling much easier. Now among other things managers can read their e-mails, tap telephones, monitor work by computers, and store and review computer files. Computer monitoring is an excellent control mechanism to manage work teams. For instance, AT&T computer-monitoring technology is being used by self managed work teams in operation telephone call centers. Computer monitoring systems can be used to collect, process, and provides performance feedback information about employees work that can help managers with performance improvement suggestions and with employee’s development. Hoos(1990) pointed out that IT has also been used to help managers identify employee work practices that might be unethical or costly. For instance, many hospitals and other health care organizations use computer monitoring to control costs of medicals procedures and accessed to controlled medication. Likewise many organizations use computer-monitoring systems for controlling costs, employee work behavior, and any number of other areas of organizational activities(Henderson, 1993)

Hence, it can be concluded from the above discussions that IT is a helping tool for managers in performing all their functions well. Information Technology is recasting the management process, providing new capabilities to help managers plan, organize, lead and control. But doing so, IT does not eliminate or decrease any layer of manager, rather it performs a support cum strategic role in all managerial levels, thoughts and acts. In short, it is rightly to say that all managers use IT to increase their efficiency and it does not decrease their importance. IT helps the management in all ways in centralized or decentralized decision making.

Information Systems and Managers

2.3.4. As there are different interests, specialties, jobs and levels in an organization for smooth working, so there are different kinds of systems. No single system can provide all the information that an organization and managements needs(Allen and Andrew(1991). Peter(1993) indicates that there are various IT systems and sub-systems, which can be used by the managers of different levels for carrying out their jobs to increase their efficiency. Following discussion provides an insight to all those systems, which are available to the managers. Shelly et. al(2004) narrate that four main types of information systems serve different organizational levels: These systems are Operational-Level systems, Knowledge-level systems, Management-level systems, and Strategic level systems as discussed below.

2.3.4.1 Operational-Level systems. These systems support operational managers by keeping track of the elementary activities and transactions of the organization, such as sales, receipts, cash deposits, payroll, credit decisions, and the flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization.

2.3.4.2. Knowledge-Level systems. These systems support the knowledge and data workers in an organization. The purpose of knowledge-level systems is to help the business firm discover, organize, and integrate new knowledge into the business and to help the organization control the flow of paperwork.

2.3.4.3. Management level systems. These systems are designed to serve the monitoring, controlling, decision-making, and administrative activities of middle managers. These systems provide periodic reports rather than instant information on operations.

2.3.4.4. Strategic-Level systems. These systems help senior management in long range planning activities. Their principal concern is matching changes in the external environment with existing organizational capability(Laudon & Laudon, 1999).

Figure 2.4: Kind of different information systems at different levels of Managers

Source: Loudon & Loudon, 1999 pp79

Keen(1995) differentiate the information systems by functional specialty i.e major organizational functions, such as sales and marketing, manufacturing, finance, accounting and human resources. Each function is served by its own information system. In large organizations, sub functions of each of these major functions also have their own information systems. For example, the manufacturing functions might have systems for

inventory management, process control, plant maintenance, computer-aided engineering, and material requirements planning.

Dhar and Roger(1997) state that a typical organization has operational, management, knowledge and strategic-level systems for each functional area. Different organizations have different information systems for the same functional areas. Because no two organizations have exactly the same objectives, structure, or interests. There is no such thing as a universal information system that can fit all organizations. Every organization does the job somewhat differently. Therefore, these information systems can be classified by functional specialty or by the organizational level they serve.

As there are different levels of managers, so different types of information they need to work, and there are different computerized systems to fulfill their information need. The following discussion gives an analysis of specific types of computerized information systems that correspond to each organizational level. The organization has executive support systems (ESS) at the strategic or upper level management, MIS-management information systems and DSS-decision support systems at the middle level management, Knowledge worker systems (KWS) office automation (OA) and transaction processing systems (TPS) at operational or lower level management. Each of the different kind of systems may have different components that are used by organizational levels and groups other than their main constituencies. A secretary may find information on a MIS, or a middle level manager may need to extract data from TPS(Oz, 2002).

2.3.4.5. Transactions Processing Systems TPS- are the basic business systems that serve the operational level of the organizations. These are computerized system that performs and records the daily routine transactions necessary to conduct the business. A transaction processing system is a computer-based information system that keeps track of the transactions needed to conduct business (Marakas, 2004). At the operation level, tasks, resources, and goals are predefined and highly structured; therefore theses systems cater only operational level tasks. These systems do have clearly predefined inputs and outputs, and there is an emphasis on efficiency and accuracy. TPS record data but they do little in the way of converting data into information of knowledge. Since TPS

collect and store the basic operational data of a company, so they are the foundation on which other information systems are built. Early computerised systems were primarily TPS(Laudon& Loudon, 1999).

2.3.4.6. Knowledge Work and Office Automation Systems: KWS-is an information system that aids knowledge workers in the creation and integration of new knowledge in the organization. A knowledge worker job consists primarily of creating new information and knowledge, One example of a KWS is the computer-aided design system. Office Automation System (OAS) is a computer system, such as word processing, electronic mail system, and scheduling system that is designed to increase the productivity of data workers in the office. They assist primarily of secretaries, accountants, filing clerks, or managers whose jobs are principally to use, manipulate, or disseminate information (Ray & Acharya, 2001).

2.3.4.7 Management Information Systems: An MIS is a computer oriented system that optimize the collection, transfer, and presentation of information throughout an organization by using an integrated structure of databases and information flow(Long & Long, 1999; Adeoti-Adekeye, 1997). It is a management system at middle management level. MIS usually serves managers who are interested in weekly, monthly, and yearly results not day-to-day activities. These systems generally are not flexible and have little analytical capability. Some researchers use the term MIS to manipulate all the information systems that support the functional areas of the organization (Davis and Olson, 1985). But Loudon & Loudon (2005) use the term as CBIS (Computer Based Information System) as the umbrella term for all information systems and to consider MIS as those specifically dedicated to management level functions. Adeoti-Adekeye(1997) observes that a management information system(MIS) is generally thought of as an integrated, user-machine system providing information to consider operations, management decisions-making functions in an organization. It is an accessible and vigorous conveyor belt for appropriate high quality information from its generation to its users.

2.3.4.8. Decision Support Systems. DSS-are also information systems at the management level of an organization that accumulate data and sophisticated analytical models to support semi-structured and unstructured decisions. DSS typically fames on the future, and are designed to help decision makers with messy or unstructured decisions(Marakas, 2004). The main feature of DSS is its interactive nature i.e its capability of allowing managers to ask ‘What-if’ questions and to build various scenarios to understand better what the real problem or opportunity is as much as to come up with an action plan to address it(Schiesser, 2003).

2.3.4.9. Executive Support Systems. ESS-are the information systems at the strategic level of an organization designed to address unstructured decision-making through advanced graphics and communications. ESS are computer-based systems that provide top managers with the capability to attain easy access to internal and external information which is relevant to strategic decision making and other executive responsibilities(Ray & Acharya, 2004). The term “executive support system” and “executive information systems(EIS) are often used interchangeably(Nord & Nord, 1995). The ESS or EIS (Executive information systems) supposedly offers the same decision support tools as the DSS, but each tool is designed specifically to support decision-making at the executive levels of management, primarily the tactical and strategic levels(Long and Long, 1999). These systems were developed in late 1980s and early 1990s to help support the information needs of top-level executives. ESS implies the most advanced graphics software and can deliver graphs and data from many sources immediately to senior executive officers for review and decisions making.(Rockart and Treacy, 2002). The ESS can be interlinked with ES (Expert Systems), which are considered generally a subset of artificial intelligence. The intent of an ES is to try to capture the knowledge and reasoning capabilities of human expert and transfer this expertise to computer systems. Expert systems are being used successfully in a wide variety of fields including medicine, financial planning, loan granting, stock trading, tax assessment, order picking and inventory control(Marakas, 2004).

Different types and techniques of networking and data communication are used to integrate computer systems. For PCs for example, for networking any one of these i.e WANs, LANs, VANs or TANs types networking can be used. It uses a computer network interface cards (NIC), special function processor (front-end and multiplexor) and routers- Which help to bridge the gap between incompatible network by performing necessary protocols conversions to route message to their proper destinations. Data is transmitted by establishing cables, wires, or wireless links by using STAR, RING, BUS and HYBRID network topologies. Different systems analysis & design (Top down or bottom up etc.) and programming techniques (Structured, Un-Structured, and Modular etc.) are used to computerize a manual system(Nance & Barry, 1992;Schiesser, 2003). Figure 2.5: Types of information systems at different levels of Managers:

Source: Loudon & Loudon(1999). pp85

Chan(2000) effectively argues that an efficiency of an organization and its manager can not be fully achieved if systems working in the organization on various levels are not interlinked. A TPS is typically a major source of data for other applications whereas the ESS is primarily a recipient of data from lower-level systems. The other type of systems may exchange data among one another as well. It all required that how much can or should these systems be integrated with each other?. Chan(2000) further says that it is definitely advantageous to have some measures of integration so that information can flow easily among different parts of the organizations.

Each organization weighs its need for integrating systems against difficulties of mounting a large-scale systems integration effort. There is no one “right level” of integration or centralization (Allen and Andrew1991; King, 1984). Each organization interlinks its systems as per its requirement. The systems discussed above are developed and programmed by using different configuration of hardware(Super, main frame, mini & micro computers) and software(Operating Systems such as DOS, Windows 98, Window NT, OS/2, Unix, Mac OS, Linux etc., Programming Languages such as FORTRAN, Cobol, RPG, Basic, pl/1, Pascal, Ada, LISP, C, structured query languages-SQL & most recent Object Oriented Programming, Visual Programming languages like Java etc. and Programming Packages such as FoxPro, spreadsheets packages like Lotus , Microsoft office products- Microsoft excel, MS Word, WordPerfect and Web browser etc(Fayad & marshall,1996; Reynolds, 1995; Gupta, 2000). The systems are tide to databases and are made on-line, off-line or interactive as per need. (Vassiliou, 1985; Korson & Vijay 1992; Flynn and Bill,1996).

In addition to the above systems for better performance some customize standardize packages like SAP, Oracle, etc and a broad array of communication media and devices which link information systems and people including Internet, e-mail, voice mail, voice conferencing, video conferencing, group ware and corporate intranets, car phones, fax machines, personal digital assistant etc., are also available to all levels of managers (Franklin, 1997; Ray & Achariya, 2004).

Almost all the organizations, which are using computers, have their own data processing (Computer, MIS, IT) department working with different employees with different expertise of hardware and software. This data processing department plays a vital and strategic role for the growth of an organization. The IT departments are required to develop and monitor corporate-wide applications to improve organizational work performance. This corporate responsibility has given IT department a new mandate to seek broader corporate-wide synergies and to link existing functional areas in new ways. Thus, the computer department now has broader corporate responsibilities and is getting the top positions in the company hierarchy. The heads of IT department are being placed at top in hierarchy(Fazio,2000).

As discussed before, every organization has different objectives and needs and has some unique features. Therefore, they use different IT systems. Some IT systems are developed in-house by the company’s own IT experts or by hiring the services of different computer consultancy firms. While other software, which required standardization and external usage, are purchased from outside vendors who are expert and have developed those systems after long research and comprehensive analysis. Such as some computer systems, which are used in airlines for ticket reservations or in banks for ATM usages8, have common features and users, therefore required standardization for industry linkage for information sharing and communication. So, same software is used across the organizations of that industry.

Conclusions

2.4.0 IT is a general term that describes any technology that helps to produce, manipulate, store, and/or disseminate information. IT is playing a vital role in development of the organizations and increasing management performance i.e efficiency and effectiveness. Although the term IT originated in the computer industry but it extends beyond computing to include telecommunications and office equipments. IT has gone under various developments phases so far to reach at present stage. Computing hardware technology has come a long way since vacuum tube technology (1946-1956) and

8 PHONIX- Package is being used in banking sector of Pakistan for ATM links.

transistor (1957-1963). It is only integrated circuits (1964-1979) and the very large scale circuits (VLSCI; 1980-present) that made the multimedia and network technology of today possible. In the last decade, there seen a continuously increase in computing power(storage, capacity, computing power and speed) and a tremendous decrease in physical size and cost, thus allowing the complex software program and bulk of data. Then it come the development of World Wide Web as a vehicle through which all dispersed information can be shared. The Internet together with advances in network technology particularly with large bandwidth has created new potentials for information management and communication. Now communication particularly wireless telecommunication is converging with IT to create even bigger potential to change the business scene. All organizations now are extremely dependent on Information Technologies due to its various tangible benefits.

The performance is an outcome of efficiency and effectiveness. Though efficiency and effectiveness are two separate terms but there exists some relationship between them i.e efficiency is concerned with the means of getting things done and effectiveness is concerned with the end, or attainment of organizational goals and both go side by side in successful organizations. The job of management of any organization is not only getting activities completed and meeting organizational goals (effectiveness) but also to do so as efficiently as possible. In successful organizations, high efficiency and high effectiveness typically go hand in hand. Poor management is most often due to both inefficiency and ineffectiveness or to effectiveness achieved through inefficiency. Therefore, it is the management job to get high efficiency and high effectiveness by all means.

The use of Internet and standard application packages is increasing day by day. The organizations are required to update continuously their IT systems to incorporate sophistication of newly emerging technologies to get steady competitive advantages. A significant contribution of IT has been its capability in providing unprecedented opportunities for sophisticated and advanced levels of interaction. IT applications are increasingly becoming integral parts of a corporate-wide IT infrastructure which directly connect the company to customers and suppliers, as well as connects the various

organization sub-units. Different IT systems are increasingly being used by firms to gain competitive advantages in the form of cost savings, product/service quality improvement differentiation, and overall customer satisfaction. The recent advances in IT have changed the way organization work. Personal computers do the work done earlier by mainframes. Computers are linked together in organizations and user share programs, files, databases and electronic messages. Telecommuting is on the boom with the attribute to connect to organizational computer systems from home.

There are different information systems i.e TSS, MIS, DSS & ESS in the organizations to help managers to perform their tasks effectively as per their level. The organizations are using there abilities to achieve new goals and processes and perform the things that were not already done. In short, IT is helping the managers in performing all their functions with different information systems developed in different software programs/packages for their performance increase. Though it is very difficult to evaluate what kind of IT solution will be most advantageous to the individual company but it is true that IT systems lead to improve broad improvements in productivity/efficiency and overall performance when it is intelligently managed.

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Chapter

3 Information Technology In Pakistan

Introduction 3.0.1 Information Technology is the key enabler of change in today’s rapidly evolving business environment. IT revolution has changed the life style of people in every part of the world. It has eliminated the geographical distances and due to advance communication facilities, the entire world can be viewed on computer screen by just a click of a button. IT is the major contributor to the progress of the developed countries. The effective use of IT is an essential element of competing in a fast-paced, knowledge based economy. IT ‘cross-cuts’ all operational functions within the organization and acts as the fabric that knits together business processes. Today governments and private companies around the world are working on IT solutions required for their growth. This technology has emerged as a very fast growing sector in Pakistan as well and obviously IT sector is a deep resowant sound. With continuous and concerted patronage of the government, there has been unmatched development in IT infrastructure in the recent years. The government, in the IT sector, is making sizeable investments and a huge chunk of this budget is meant for human resource development and provision of enabling infrastructure. Majority of the organizations working in Pakistan are making use of IT to increase their performance but of course there is a performance variance among different industries.

This chapter presents discussion on Information Technology status in Pakistan. It consists of two sections. Section I examines IT history in Pakistan, Pakistani Government contributions to support IT diffusion in the country, IT usage in Pakistan industry and Pakistan IT infrastructure i.e. Pakistan’s hardware and software industry, status of Internet, E-Commerce, Human Resources and Telecommunication in Pakistan. It also discusses growth and potentials of IT in Pakistan. Section II first brings into prominence the importance of IT usages in business organizations and then it leads to the core areas of research and discusses IT usage in Pakistan’s Manufacturing and Banking Industry.

Section I Information Technology Status in Pakistan

Historical Development 3.1.1. Pakistan is a developing country. It got its independence on 14th August 1947 as a result of the division from the former British India. It encompasses 796,095 Square. km with about 152.53 Millions population9. Pakistan is the first 5 in GDP in Asia and top 10 in total economic development in Asia. It is the 7th most populace country in the world, stands at 147th place in the literacy rate, 128th place as per the Human Development index and 132nd position on GDP per capita basis among a total of 160 nations10.

Pakistan is on the wake of its progress. In development, adoption and diffusion of technology, it has been facing the same problems like other developing countries. As it depended on the technologies mostly transferred from the developed countries. At the time of inception of Pakistan in 1947, there was no base of Information Technology in the country. The office work was carried out manually and office documents were prepared on manual typewriters. There was not even a single electric typewriter. Post, telegram and telephone department (PT&T) established during British rule in 1885 was already working in the areas that came under the jurisdiction of Pakistan. At that time the only fastest communication link available was through telephone and telex.

The process of computerization in Pakistan started in 1957, when a company named ‘Packages Ltd.” started using computer for its work. It is considered the first company in Pakistan, which started using computer11. In 1960 an IBM main frame computer was installed in PIA for flight reservation and by 1967, there were about 17 mainframes working throughout Pakistan in different organizations (Aslam, 2001).

9 www.pakistan.gov.pk 10 The Dawn, January 23, 2006. 11 Zaidi and Naeem (2001), “Growth of IT education in Pakistan”, Pakistan & Gulf Economist, September 24-30, pp 28. and www.moitt.gov.pk

The IT met slow introduction in Pakistan right from beginning because in the initial period of 1960s, the import of computers was not opened and it used to take almost two years for a software company to get import license from Government of Pakistan. The custom duties and other import taxes on computers/electronic items were also very high. It was an era of mainframe computers and prices of computers were very high. Because of high import taxes and customs duties, the purchase of computers was out of the reach of even government departments with huge budgets (Mahmood, 2006).

In 1964, Water and Power Development Authority (WAPDA) took the lead and established its computer center in WAPDA house, Lahore by installing IBM-360 mainframe computer. Then after the main commercial banks in private sector i.e. Habib Bank, United Bank and Muslim Commercial Bank started acquiring computers to regulate their banking work. Quaid-e-Azam University Islamabad, Atomic Energy Commission and University of Engineering & Technology, Lahore and PIA-Karachi also acquired IBM Mainframe Computers. At that time, International Business Machines (IBM) was the biggest computer company in Pakistan and IBM-360 & 370 models of mainframe computers were popular during 1960s & 1970s. A British computer company named as International Computers Limited (ICL), also started selling mainframe computers in Karachi, Lahore & Islamabad. KPT, KESC, Karachi Gas, PNSC, AIOU & State Life Insurance Corporation were some of the organizations that purchased ICL mainframe computers. National Cash Register (NCR) was the 3rd biggest IT Company in Pakistan to sell computers especially the data entry machines at that time(Aslam, 2003).

In software development side in 1977, the first private software company “Systems Private Limited”12 was formed by “Packages Limited” in Lahore. In 1980s, the personal computers brought a revolution not only in the world but also in computing environment of Pakistan. The technology was miniaturized and desktop computers were introduced having cheapest technology (Ghauri, 2003).

12 www.systemsltd.com.pk, www.moit.com.pk, The Dawn, 02.04.2006

As in the advanced world the governments had influenced the use of IT through its role as investor, as a consumer, and as a strategist or a regulator, the government of Pakistan too, after realizing the IT benefits, has been playing all these roles in the country. Implicitly, through its investments and consumption activities, or exploiting through “National Strategies”, the government has been trying to determine the pace of IT usage in the country.

Imam(2002) demonstrates that as the advent of IT euphoria has taken over the policy makers and masses in the world, in Pakistan too, realizing the global revolution in IT, the Government of Pakistan liberalized the hardware & software imports in 1985. The custom duties on electronic goods were reduced drastically due to which personal computers flooded the hardware markets and people started using personal computers in offices and homes. In 1990s, the P.C servers became stronger & stronger and started replacing Mini & Main frame computers in offices. The network technologies started flourishing and the Main frame & Mini computers started vanishing from the offices and were replaced by P.Cs & P.C Server LAN environments.

In 1991-92, heavy custom duties on computers were completely removed. The real quantum jump was experienced in early 90s, which can be termed as IT revolution in Pakistan as satellite communication technology was introduced. In 1991, 90% telephone lines were converted to digital. In 1995, Internet Service Providers (ISPs) started providing Internet facility to Internet users and now with rapid growth there are more than 132 ISPs in operation all over the country providing internet facility to more than 3,000,000 users13.

It is all in 2000s, that the government gave a lot of emphasis to IT Sector. New IT educational institutes are opened and IT professionals are hired to impart IT training in universities. Nationwide IT seminars, forums, exhibitions and competitions are being arranged to create IT awareness among the people. Computer as a subject has been introduced in schools & colleges. Cyber Cafes are opened to create awareness for Internet

13 www.moitt.gov.pk

use. Telephone network has been enhanced and in rural areas, telecommunication facilities are being provided through small exchanges and PCOs. Links between Pakistan and other countries have been improved significantly (Imam 2002, Aslam, 2001a).

Recent Developments 3.1.2. As discussed, computer is introduced in Pakistan though in 1960s but its use was restricted to scientific purpose and to some extent for processing of data relating to traditional accounting, billing, payroll, and inventory control systems in very large organizations. The massive computerization in the country started after 1980s when most of the companies started using computers for their business growth. They started using computer for other functional areas, in addition to the areas mentioned above. The government started fully backing computer use at the same time.

The government of Pakistan is taking all steps to make Pakistan an IT super power by adopting IT as a national program so as to enable personal and national growth. The country’s current IT policy and action plans intend to involve all walks of life, e.g., industry and commerce, banking and insurance, finance, revenue, communication, media, human resource development, and defense etc.(Rehman,2001).

The computerization in the country initially was monitored by the Ministry of Science & Technology(MOST). The national focal point for IT, which was previously missing of diffused, was rectified with the creation of new IT and Telecommunication Division in March, 2000 under Ministry of Science and Technology (MOST). All IT related organizations were placed under this Division. The MOST was constituted of two divisions i.e. Science and Technological Research Division (S&TR) and IT & Telecom (IT&T) Division. The S&TR Division was focused on Science and Technology areas other than IT & Telecommunications. But in November 2002, a separate ministry for Information Technology was created and IT & Telecommunications Division became a part of Ministry of Information Technology (MOIT). The principal agenda of the Ministry of Information Technology (MOIT) is, building Pakistan’s IT competency in the twenty first century. Its major objectives are: Transformation to Electronic Government,

Development of software Industry, Building a state of art Infrastructure and Development of a qualitative pool of Human Resource14.

Ministry of Information Technology (MOIT) is the national focal ministry and enabling arm of the Government of Pakistan for planning coordinating and directing efforts to initiate and launch IT and Telecommunication programs for economic development of the country. It is working on national agenda to have a sound and sustainable Information Technology and Telecommunications base which will result in the socio economic development of the country and the attainment of the vision for better Pakistan. The Ministry is maintaining firmness and viscosity with the policy and achievements made in the IT and telecommunications sectors since its inceptions and to cope with modern challenges and meet requirements of the IT and tele-communications, the policy is regularly updated. Many other departments/ institutions like Electronic Government Directorate, Pakistan Computer Bureau, Pakistan Software Export Board, Pakistan Telecommunication Authority, Computer Society Of Pakistan, Pakistan Software Houses Association (PASHA)15 etc. are working side by side the Ministry of Information Technology to help forward IT in the country(NET Mag Cover Story, 2005).

Pasha(2005) also discusses some more efforts of the governmental for uplift of IT in the country. He argues that the IT has become the focal point of the government now. The government has set up technology parks and IT boards in all provinces to promote economic growth in IT enabled services sector. New IT institutions are also being established in the country and separate IT directorate at each district level has also been set up to diffuse IT in each department. The government has also started at mass level a talent hunt program to attract IT experts to work for Pakistan. A handsome budget has been allocated for the young graduates for local and overseas advance IT education and training. To promote and implement e-Government concept, computer training and education for every government employee has been made compulsory in federal

14 www.moitt.gov.pk 15 PASHA is a representative body of software developer of Pakistan. It was found in late 1992 by 9 software hoses and now have about 350 members national wide: www.moitt.gov.pk

ministries and record of all ministries and departments is now being computerized on priority basis.16 IT has now been inducted at all level of government.

To embark upon an aggressive program to improve efficiency and provide quality services to the citizen of Pakistan, in line with their efforts to improving organizational performance and achieve high standard of work ethics, P.T.A, C.B.R and S.E.C.P and various other public organizations have started to automate all their operations. Key projects landed include citizen online, electronic processing of internal files, e-filing of income tax return, electronic government projects and e-Commerce networks. To provide protection and enhance the confidence of users, providers and facilitators of information services, legislation based on the recommendation of the working group comprising IT and legal experts have been framed. Action in the area of digital signature act intellectual property and copy rights act and the consumer protection act has been started(Kazmi, 2005, Ismail, 2003).

As argued by Osama(2005), the IT revolution is the fastest emerging revolution seen by the human race and the Internet surpasses all. Electricity was first introduced in 1873 and it took 46 years for its mass scale use, telephone introduced in 1876 and took 35 years for mass use. Television introduced in 1926 took 26 years for mass use. PC introduced in 1975 took 16 years, mobile phone in 1983 took 13 years for mass use while the web introduced in 1994 took only 4 years for mass use17. The IT revolution thus has given a new vision of the future. It is estimated that in Pakistan presently there are around 2,100 mainframe and minicomputers in the country with nearly half of them are in the Government sector. Liberal import policy and reduction/removal of duties have led to a burgeoning usage of PCs and servers. It is estimated that nearly half a million PCs are added each year, representing a three fold increase in annual volume over the decade straddling the 21st Century. Analysts estimate that this rate of growth could very well quadruple by the end of 2010. The Federal Government of Pakistan has laid great

16 A decision taken in the first meeting of National E-Government Council under president ship of Prime Minister of Pakistan Mr. Shaukat Aziz on April 27, 2005. (The Jang, April, 28, 2005). 17 Kofi Annan, Secretary General U.N, commented on 17th May, 2004, on world telecommunication day.

emphasis on expedition towards the intensity of Information Technology in a variety of fields.(Ghauri, 2003; Pasha, 2005).

Kazmi(2000) rightly noted that in Pakistan, IT is becoming a necessity. The market of Pakistan today buzzes with IT activities and the current boom in IT dates back to early 1996 with introduction of Internet which opened up a communication channel between Pakistan and rest of the IT world and there has been no looking back since.

To conclude all above, it can be said that the Government of Pakistan now is giving all- out support and push to IT sector. Millions of dollars are being invested by the Government in IT, and majority being spent on human resource development and enabling infrastructure provision. The Government of Pakistan is leading the technology revolution in the country in various projects aimed at improving infrastructure, human resource development and integrating IT in the public and private sector.

Pakistan’s Information Technology Infrastructure

3.1.3 IT as discussed earlier today encompasses a wide range of areas and covers a whole gamut of hardware, software, networking producers & services and telecommunications technologies (William and Sawyar, 2005). IT thus is a hybrid technology that results from a synergy between telecommunications infrastructure, software & hardware development, standards and human skills. Infrastructure of IT sector in Pakistan consists of following segments(Imam, 2002);

a. Hardware & Software b. Telecommunication c. Human Resources

As William and Sawyar(2005) comment that an established IT infrastructure is a necessity for development of an organization and a country thereof, so is the case for Pakistan development. All the developed countries have well established IT infrastructure

and self-sufficiency in all IT tools but underdeveloped countries like Pakistan are still striving to have most of them. Many developing countries lack the required IT and telecommunication infrastructure to become true IT user. Therefore, to cope with the rapidly advancing IT world during last ten years, Pakistan has been developing IT human resource and necessary infrastructure. With the continuous efforts and patronage of the government and private companies, IT is considered to be in the take off stage and is catching up with the regional and global industry18. This technology has emerged as the fastest growing sector in Pakistan now(NetMag August, 2005).

The ensuing discussion highlights the salient features of IT infrastructure of Pakistan. It thorough light on all segments of Pakistan’s IT sector i.e. IT Hardware & Software, Telecommunication, Internet and Human Resources.

Hardware Industry in Pakistan 3.1.3.1. Gupta(2000) defines computer hardware industry as “designing, development, manufacturing and maintenance of all products, modules and components that form the building blocks of an IT infrastructure”. A thriving hardware industry is pivotal to the growth of IT infrastructure and services. Computer hardware manufacturing is extremely capital-intensive industry. This is a relatively young industry, and is facing lot of problems with regards to getting recognition in computer manufacturing in Pakistan.

Khan(2004) demonstrates that presently, there is no computer hardware manufacturing activity in Pakistan in true sense. The reason is that imported hardware components are available in abundance and on fairly cheaper rates. Especially after the emerging of China as a big computer hardware manufacturer and supplier, the prices of hardware components have been reduced. In this scenario, the computer hardware manufacturing in Pakistan is currently not feasible. Khan(2001) further adds that hardware industry is profitable if it works on economy of scales, which depends upon vast markets. In Pakistan, the market is negligible for hardware consumption and it will not be competitive with China, so this industry has not reasonable prospects in Pakistan to

18 “Pakistan to hold global IT moot”, The Nation, 23rd May, 2002.

develop & flourish at present. Another researcher Ghauri(2006) argues that there is also no much encouragement by the Government for consumption of locally manufactured IT products as China. Mostly the computer vendors are assembling the imported parts and components to produce the personal computers. Some companies like INBOX, RAFFLES, MICRO PAK etc. have developed organized assembly lines and are producing small components like casings of PCs. and M/s Enabling Technologies are doing some hardware designing activity(Khan & Shah, 2004; Ghauri, 2006b; Money plus, 2006).

Software Industry in Pakistan 3.1.3.2. Software is Information Technology’s Achilles heel. Software Industry in Pakistan has developed a lot during last ten years. Due to liberalized IT policy, a mushroom growth of software houses has been registered in IT sector. The Government of Pakistan is taking very significant steps to develop IT culture in Pakistan and lots of incentives have been given to software houses to start software business. In a short period of three decades, computer science has developed from a branch of electronics to one of the largest engineering disciplines itself. IT now consists of many branches and software engineering is considered to be the largest. The reason for the rapid growth in the demand for software development is lead by the widespread use of computers in everyday life, evolution of high-powered general-purpose computers and low cost of maintaining, debugging and duplication of software products. The potential in the field of software development is still growing worldwide and is expected to continue to grow for decades to come19(Imam, 2002).

The computer software can be grouped into two types i.e 1) Systems Software(Operating systems etc. and 2) Application Software(Business programs etc.) (Shelly et.al, 2004). In Pakistan system software for micro, mini and mainframes comes largely of the packaged variety from the vendors who supply hardware to the companies or in some case these software are imported directly from the producing firms, which all are based in developed countries. Except one or two (Urdu version of a typing software), most of the operating

19 “Software exports booming”, 2001, The Business Recorder, 31st May, 2001.

systems and languages/packages are being imported from developed countries. As far as application/business software development is concerned, there are lot of development activities in Pakistan. According to conservative estimates, there are about 660 software houses based in Pakistan which are busy in developing and exporting software to the developed world in areas as diverse as database management, Internet applications, e- Commerce, CAD/CAM management systems, etc. The fields in which these companies are involved are virtually unlimited. More and more opportunities are being thrown open to them every passing day as their skills, potential and strategic advantages are getting accepted in major software markets around the world including but not limited to USA, UK and the rest of Europe, South Africa, Japan and Australia20. But this is only the tip of the iceberg, as vast potential still exists for the local IT industry to become a formidable force in the global arena. So the Government is taking all possible measures to spur activity in the IT sector and the framework is now more conducive than ever before for investments in the sector.

The software industry has become one of the fastest growing industries in the world, capturing billions of dollars in the global market. Its contribution to the socio-economic development of the country is also very significant, especially for the developing countries. So realizing this importance of the Software Exports, the Government of Pakistan has established Pakistan Software Export Board in 1995, with main objective of encouraging software exports in the country. Taking a step further the Government declared the Computer Software Information Technology as “Industry” by a notification in March 1997. The Software Houses, though established in the 80s, but software market in Pakistan came in the limelight in early 1996 with the introduction of Internet which opened a communication channel between Pakistan and rest of the IT world (Khan and Shah,2004).

The Government of Pakistan has extended very liberal fiscal and monetary incentives for software exports. With the efforts of PSEB, software exports are now picking up and it

20 Federal Bureau Of Statistic(2002), “Census Of Software Industry and related services of Pakistan”, reproduction and printing unit, FBS, Karachi, Pakistan.

has gone up to US$ 32.88m during 2003-2004 from US$22.62m during year 2001-200221 and it has further grown upto US$ 48.50m during 2004-2005 (Ayub, 2006). This vibrant sector has set an export target of $70m during the current financial 2005-2006 year22. Ahmad(2005) estimates that Pakistan has worth US$50-100M software industry and this software growth in the country has been contributed to the liberal and supportive polices of the government. Ismat and Hasan(2005) say that the ability of Pakistan to produce quality software is 1) its abundant pool of IT professionals 2)emphasis on software quality and well-managed processes. Currently though a few software companies have either ISO 9000 or CMM(Capability Maturity Model) certifications but this number is being increased. The quality of Pakistan's IT technicians is not always of the desired level because a number of substandard training institutions claiming to be training people in IT have mushroomed all over but they actually teach very little. However, the government is aware of these constraints and deficiencies and is trying to remove them to improve the overall training facilities (Khan, 2005).

Since the declaration of the IT sector as an industry, the Government is giving significant benefits to this industry to promote investment and it has positive results. Although some of the top names like IBM, NCR and Siemens are present in the country for decades, the world wide boom in IT, especially in the 1990s spurred investment by many other companies from North America, Europe and the Middle East. These companies were looking for a well-fitted environment for their operations at a lower cost margin. In Pakistan they have found a suitable climate with highly qualified individuals to help them grow their businesses internationally23. Ghauri(2006b) says that companies are making heavy investments to benefit from emerging technologies in hardware, software and communications areas. As a result Pakistan in recent years has seen considerable growth in its IT sector. It is at the forefront of this industry with more than two million computer literate people and a state of the art infrastructure. But a researcher Kolachi(2004) argues

21 1. “Fifteen year IT relief to software exports(2001), The Business Recorder, 21st May 2004. 2. “IT relief to software companies to help boost forex earnings(2005), The Business Recorder, 18th May. 22 These are estimated figure of PSEB, as State Bank of Pakistan claims with reference to PSEB that since export of IT is not carried out through the formal letter of credit. 23The Business Recorder “Private sector urged to play role in promoting IT(2001), 6th May, 2001.

that at the same time a lot more than innovation is required for strengthening the computer software industry. The Pakistani IT industry centers on a strong national revolution towards developing the country as a major player in the international forum. Support programs from the Government coupled with an established private sector are creating many opportunities for realizing this goal. IT professionals trained in a variety of disciplines from abroad and locally are applying their innovative ideas to maximize the benefit obtained from the information revolution24. More and more international companies are seeking solutions from Pakistani professionals to remain competitive in the global economy. Kolachi(2004) with the shrinking global scenario suggests that, Pakistan urgently needs to further revolutionize its IT sector.

Another researcher Ghauri(2006b) is also of view that there is more need to improve quality of Pakistani software and timely completion of projects. In his recent survey on Pakistani software usage, he found that some companies are reluctant to use Pakistani software because in few systems, there were horrifying statistic for the number of software systems which are delivered too late for use or with so many bugs (errors) that they are unserviceable or a proportion of the systems do not carry out the task for which they are designed. Ghauri(2006b) says that the fault lies both with the software industry, which is still an amateurish, craft-based discipline, and with the customers who rarely know what they want of a computer system or how to specify it. Much of the dissatisfaction with IT is the result of software-late, inappropriate or useless and there is need to overcome these problems he adds. Hydir(2006) notes that with all efforts of the government and private concerns, though the use of Pakistani business software is increasing both in local and foreign market but still the industry is tended to consolidate into a few large multinational companies, which are having most of the software industry share.

Internet Status in Pakistan 3.1.4. The Internet has been described as a “Network of Networks” or as a “Loose collection of related computers networks” (Kendal and Kendal,2000). Measurement of

24Pakistani software Company named NetSol Ltd is also listed on the Nasdaq stock exchange.

internet diffusion are usually based on several indicators such as : Connectivity, number of hosts, no of websites, number of users and other compound indices(Willam and Ronalds(2000).Based upon these indicators the following discussion gives us true status of Internet usage in Pakistan.

Hussan(2005) has investigated that though Internet entered in Pakistan in 1995 but it got real boom in the year 2000 when the government started backing e-Economy in real sense. Cyber Net and DIGICOM both are the first Internet Service Providers in Pakistan, which were established in 1996 and can rightly be termed as the most proactive ISPs in the country. Over the last one-decade, several others like Brain Net, COMSATAS, WOL Net, Pak Net, Cyber Net etc have joined the fray. Today, about 1900 cities of Pakistan have been connected through Internet. About 138 companies have been awarded ISPs license, and are providing Internet connectivity and other web-related services in the country. COMSATS Internet Services also took an initiative to train and transfer the IT workforce of Pakistan in Cisco Network Training.

The growth rate in Internet and information services in developed countries is unprecedented, varying up to 100% per annum, depending on socioeconomic level. The Internet growth rate in Pakistan is 30%, whereas IT growth rate is estimated at 40% p.a.25 Today more than 2.426 millions people of Pakistan can access Internet and other information networks of the entire world27. Access to medical, research and university databases etc is of very high value. Latest information can be quickly retrieved and down loaded from remotest corners of the world. It is necessary to share information, on best practices of development, usage of information and communication technologies between public and private sectors. Pakistani government also estimates explosive growth and aim at information network capacity(Ismail, 2003, Khan and Shah, 2004).

The IT market in advance countries like USA, Canada, UK, Germany, Australia, Japan and Far East has matured and still growing faster. The E-Mail and Internet network development in Asia region continues to be still slow. However, developments efforts

25 Minister for Information Technology, The Jang, 15th May, 2005. 26 World wide internet user reached 1b, India has 6M and China has 100M internet users. C.N.N 17/01/05 27 www.bbcurdue.com

around the region demand for added capacity, increased access and better network to support new services for Internet users. Around the globe IT and telecom products and services are in heavy trade. This volume is estimated to be over US$ 1000 billion p.a. around the world. The IT growth rate is about 50% p.a. (compounded annual growth rate including growth in Internet.28

Keeping international telephone and Internet access statistics in view, Pakistan still has low access to information network. Today global ratio of public access to telephones compared to Internet is about 12:1 which is improving every year. While looking at the information society in Pakistan with a vision up to 2010, it is anticipated phenomenal growth in computer terminals, multi-media, and information terminals and in allied fields. The deregulation policy and participation by more than 50 private sector licensees in data and Internet services with large number of equipment vendors is expected to accelerate growth and awareness in the society.29

E- Commerce status in Pakistan 3.1.5. E-Commerce stands for electronic commerce. It is new way of doing business in this IT revolution world where physical boundaries have no meaning. E-Commerce offers many inherent benefits. It enables trade efficiencies by eliminating the delays, helps cuts the documents costs by allowing trade partners to exchange transaction data digitally and reduces errors to increase productivity and efficiency. Most importantly, it removes geographical barriers to have a real time online access to international markets at affordable costs(Laudon and Laudon, 2005; SAMEDA, 2005).

Choi(2001) argues that a firm that employs IT, and especially real time networking in its various activities is called e-business firm. Thus most firms will qualify as an e-business firm in its broadest sense. E-business firms include not only those that sell products online but also those that use computer and network technologies in their manufacturing, operations, supply chain management, marketing, sales automation and customer support.

28 “Internet May offer Boost to developing Countries”, The Dawn, May 9, 2001. 29 “Turning Internet promises into profits” The Dawn, May 9, 2001.

In short, he says that any firm that applies digital technologies and networking to organize it and manage its business operations and relationships is an E-business firm.

Rab(2004) demonstrates that commerce on the Internet reached $3 trillion globally in the year 2003. Many countries have yet to draw up a proper set of operating principles to govern legal, regulatory, and enforcement issues. With the emerging dot.com culture in Pakistan, there has been a mushroom growth of information web portals, specialized search engines and commercial websites in the last couples of years. The number of Internet users in Pakistan is constantly increasing and is likely to soar manifold in the next couple of years. Internet Service Provider Association of Pakistan (ISPAK) claimed that the by the end of year 2005, number of Internet subscribers have reached about 2.4 millions and there are about 4.0 millions e-mail accounts, and current number is much more. There is huge decline in bandwidth rates for high speed internet services across the country and this will help in the growth of broad band subscriber. On IT infrastructures side, as on November 2005, 1900 cities and towns have been connected to Internet via local PSTN loop30.

The Government is taking all measures to promote commerce on Internet. As Mujahid(2003) pointed out that Government of Pakistan has been on the forefront to trigger the IT and E-Commerce revolution in Pakistan through virtual and distance learning and e-commerce enabling initiatives. The most jutting out E-Commerce initiatives taken by the Government of Pakistan are as follows:

- An establishment of E-Commerce working group and E-Commerce cell at the Ministry of Science and Technology (MOST). - Facilitation of Internet merchant accounts by the State bank of Pakistan - Legal recognition to digital signatures and electronic documents, records, information, communication and transactions.

30 www.ptcl.org.pk , Aslam(2002) , PTA Telecom status report 2003-2004, 2004-2005 & Khan & Shah(2004).

- Protection of the intellectual property rights through Electronic Transaction and Governance Ordinance31. - Electronic Fund Transfer (EFT) through 2000 branches in major cities.32

Farooq and Mahmood(2005) argue that with an E-Commerce plan envisaged by the government, the financial sector will become the springboard for developing b2b E- Commerce in Pakistan. The plan takes an aim for an E-Commerce network, known as EC-Pak Network services to connect about 2,487 branches of 25 local banks and all foreign banks, in 12 big cities of Pakistan. All these banks will be linked to the State Bank of Pakistan and, to public and private stakeholders such as the tax collecting agencies, provincial governments, national saving centers, post offices, utility companies, government bodies, money changers, trading houses, airlines, shipping lines, clearing agents and insurance companies. Hence EC-Pak will allow stakeholders to communicate with each other and it will provide specialized value-added services essentials for an E- Commerce such as security, message distribution, audit trial, acknowledgement and other related services that are more extensive and more advance than provided by a conventional Internet Service Provider (ISP) (Khan, 2001).

Kazmi(2004) posits that although a lot has been done to promote E-Commerce in the country but still much more is expected in this regard. He while narrating the E- Commerce status in Pakistani banks says that though 1-Link net (ATM network of all banks except MCB) and M-NET(ATM network of MCB) links are connected since March 16, 2004. Still lacks of other E-Banking facilities have become a serious constraint in achieving the ultimate objective of E-Commerce and Pakistan has not been able to establish the network to facilitate E-Commerce in its true spirit. Kazmi(2004) terms this slow pace to the low literacy rate, lack of reading, research and development, still high cost of computers, lack of basic understanding of how-to use Internet, lack of entrepreneurial spirit, unstable economic, political and legal environment, absence of regulatory frame work for E-Commerce and absence of interactive websites which allow

31 Electronic Transactions Ordinance 2002, Announced by President Pervaiz Musharaf on 11-10-2002. 32 “Pakistan May do well to join E-Commerce”, The Dawn, May 9, 2000 & The Dawn, January 23, 2001.

E-Commerce transactions. Rizvi(2005) rightly points out in this regard that it is true that Pakistani Government taking some steps already and people in Pakistan are learning fast to use the IT but still there is a need to act more quickly to over come all barriers. Table 3.1 provide a brief overview of Pakistan’s IT industry status upto December, 2005.

Telecommunication Status in Pakistan

3.1.6. Telecommunications today is a product of technology and politics. The first electronic telephone switching was installed in the United States in 1965. It used a computer for control. In the past 25 years, computer hardware and software have driven telecommunications networks to dramatically increased speeds, capacity and functions. Business demands for data communications began to grow in the early 1970s. At that time the fastest rate at which data could be transmitted was 1200 bits per second.

Table 3.1: Pakistan’s IT Industry Status

Source Pakistan & Gulf Economist, December 5-11, 2005. pp 11.

Now a combination of transmission media-terrestrial copper cable, microwave radio, satellite and optical fiber has removed the earlier constraints of cost and speed that helped up the large scale commercial use of telecommunication. For the business user, several kinds of network and communication links have to be considered including LAN, WAN, MAN, ISDN, DXX, DSL, RADIO and VSAT33 etc(Cane 1992).

33 VSAT: Very Small Aperture Terminal. This proprietary network is based upon satellite technology.

The other censorious element shaping IT is politics, the regularity control exerted over telecommunication. Here there are many market differences between countries. In developed countries, telecommunications regulations were traditionally aimed at the provision of the universal service through a network controlled by one regulated company, the advantages of innovation, competition and freedom of choice being traded for social equity, integration and integrity of the network. The approach is changing now, countries like USA, Japan,U.K with passing the reforms laws, have liberalized their entire telecom infrastructures. The innovation and development in ICT’s over the last decade have changed the face of the Telecom business globally. As a result, telecommunication sectors world over are confronted with new challenges of restructuring and are working towards incorporating the latest technological change to keep pace with the changing time(Choi, 2001).

Pakistan at the time of its inception in 1947 owned a meager telecom base with just 7000 telephone lines. Telecom service was meant just to meet the needs of country administration. The year 1962 saw the first big sector change when Post Telegraph and Telephone services were separated by establishing independent T&T and Postal Departments. Since the mid-1980s, a number of countries including Pakistan overhauled telecommunications sector, to arrange / mobilize additional capital, improve performance of operating enterprises and respond to rapidly growing pressures for more varied services. The pace and scope of sector reforms have varied considerably in South, Latin America and Asia. A number of countries opted to privatize their telephone entities. In the Far East (early 1990s) there have been initiatives on partial privatization (Thailand & Malaysia etc) including liberalization of non-basic services. The results achieved were found to be beneficial. This brought the wave of change in South Asia also. To begin, Pakistan in 1990 also started taking gradual sector reform measures within the existing legal and regulatory framework. In line with emerging trends, private sector participation and deregulation initiatives were taken in between 1989-199134.

34 “Private sector urged to play role in promoting IT”, The Business Recorder, 6th May, 2001.

Pasha(2005) discloses that the current strategy of government of Pakistan is like the advanced countries, which includes the restructuring of the telecommunications sector to improve its performance. Therefore, efforts are being made to eliminate constraints on the development of the economy. The government of Pakistan is continuing to encourage private sector and awarded licenses for cellular, pay phones and paging services. By these efforts some improvements have became possible in the availability and quality of telecom services followed by revenue growth. The PTC Act of 1991 opened the venues for new entrants in telecom service market. Some non-basic services are given to private service providers. Since 1991 the Ministry of Communication started granting operating licenses also for data and Internet services and removed controls on telecom terminal equipment manufacturing. Khan(2005) also reports that this trend is still continuing. Private sector is encouraged in the sector development including some new telephony services, either through licensing or by outsourcing. One of the major milestones is achieved (in restructuring the sector) by introducing the new legal framework in the form of Pakistan Telecommunication (Reorganization) Ordinance, which was later enacted by the Parliament with some amendments as an Act in October 1996. Today, this new law is governing the telecommunication sector in Pakistan and under this law the Government has privatized PTCL, to help inject private capital and skills into the mainstream service business.

Now the Ministry of IT is responsible for policy and sector monitoring of telecom sector. The Pakistan Telecommunication Authority (PTA) assumed the responsibility for regulation of the telecom sector. Frequency Allocation Board (FAB) was made responsible for frequency spectrum management and its monitoring. National Telecommunication Corporation (NTC) was established to provide telecommunication services to public sector (govt & defense) organizations. Pakistan Telecommunication Employees Trust (PTET) was created as a trust to takeover statutory function to disburse pension and other benefits to the employees of the PTCL. Pakistan Telecommunication Company Limited (PTCL) was incorporated as a public limited company under the Companies Ordinance 1984, with the principal object of provision of domestic and international telecommunication and related services. About 95% of the assets and

liabilities of PTC, at net book value, were transferred to PTCL whereas the remaining 5% assets were vested in PTA, FAB, NTC and PTET(Aslam, 2002b; Rehman, 2002).

In 2003, Pakistan’s economy has witnessed yet another year of exceptional growth and telecom sector has acted as a catalyst for it. Pakistan’s government has declared telecom as a priority area for the inflow of foreign investments, provision of employment, better telecom services to the people and reduction in poverty in the country. To materialize this end telecom sector was liberalized in 2003 and since then a number of multinational telecom operators have started investing in the country35. For the years, Pakistan’s telecom sector has plodded along, seemingly stuck in the mid-20th century. From 2.1 phones per 100 Pakistan in 1999, the number of fixed lines has caught up to just 3.5 per 100 today. And while cellular has been more dynamic, only about 20% of Pakistanis have cell phones. Mobile subscribers reached about 30 millions at the end of August 2006, whereby total mobile penetration reached 17.16%. The mobile sector thus grew by 195.6% in one year, which is the highest ever annual growth in the history of Pakistan’s mobile sector. Since July 2003, PTA has handed out more than 200 fixed, mobile and long distance licenses to different companies. More than 360 cities all across the country are covered by mobile operators’ services(Netmag-September 2006).

Share of telecom sector in the gross domestic product has also touched 1.9% last year. Teledensity of Pakistan Jumped to 13.67%(August 2005) breaking a record of percentage growth of 105% in just one year. Total investments made in telecom sector after liberalizing is estimated to be US$ 1.02 billion till the end of year 2004-2005. In 2004- 2005, telecom sector remained one of the major contributors in governmental revenue and the government collected Rs 20.5 billions as GST/CED from the sector36. Similarly, approximately 202947 direct and 233266 indirect employment opportunities were created during the year37. Share of telecom in GDP reached 1.9%. The pace of its growth is more than 100%. (Bhatti, 2006; Sargana, 2006).

35 Growth of Telecom sector in 2004: The News International, Wednesday, January 26, 2005. 36 Pakistan has won the “Government leadership award 2006” for rapid progress in the field of telecommunication. After Brazil, Pakistan is the 2nd country to receive the honor(The Dawn Jan 28, 2006). 37 Pakistan Telecommunication Authority online quarterly report 2005.

Pakistan Telecom Authority (PTA) has shown concerted efforts to make this sector fastest growing in the region. While turning liberation into reality, PTA was faced with a number of challenges. The Authority however was fully prepared to successfully go through this transitional phase. The authority took diversified steps to enhance competition after the implementation of deregulation polices by providing all facilities and conduce environment to private entrance. Keeping in view the huge untapped potential that this sector offers for growth and encouraged by a vibrant growth and enormous development over the last few years, PTA proposed to the Government to award “industry” status to the telecom sector. The government very positively responded to PTA’s proposals and the sector was declared as an “Industry” in 2005 with the aims to bring certain benefits allied with this status, such as borrowing of foreign companies from local market, no minimum investment requirement for manufacturing, subsidized utilities etc.(NetMag-November 2005).

Following its liberalization policy Pakistan has ultimately privatized its national telecommunication services i.e PTCL in 2005. Though, in 1994, 12% shares of PTCL were sold through capital market, while Etisalat a U.A.E based company won bid of PTCL on 18/6/2005 for purchase of 1.3 billion shares(26 % of total share) of PTC @ $1.96(Rs 117) per share, with PTC’s controlling management rights. The Etisalat after finalizing the payment schedule with government of Pakistan has taken over charge of PTCL since 12th April, 200638.

Rab(2005) says that Pakistan likes to promote a business-oriented policy to associate private entrepreneurs in telecom sector. The options are based on interconnect and revenue sharing arrangements with licensed operators or through rebates and markup in outsourcing contracts with private sector operators. PTCL has successfully entered into collaborative arrangements with foreign and local telecom companies. The Information Technology and global super-highway network is opening up new possibilities for the

38 Etisalat-PTC deal finalized: PAGE- March 20-27/2005 & DAWN 3 April, 2006.Money Plus Nov 28, 2005- “What’s scaring Etisalat”,

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future of telecommunication the world over. Pakistan did lag behind in this area but now it is improving fast. The most advanced telecom network owned and operated by PTCL now, which can help the society. Major initiatives have been taken to liberalize telecom and Information Technology market of the country. The Information Technology & Telecom Policy stresses the importance of building sophisticated infrastructure to face the challenges of Information Technology of the 21st century.

The IT infrastructure covers most part of the country by using fiber optic channels, satellite systems and digital switches to create a strong, permanent and reliable IT infrastructure. This infrastructure will support private players in IT and Internet area.39. PTCL tariffs have been reduced keeping business needs in mind along with the future competitiveness of telecom giant. Recent modifications in the hierarchy of PTCL own ISP, PakNet, also bode well for the ISP industry in general, with the positive change being made in ISP with the widest national outreach. Competition among ISP’s is sure to rise, leading to improving better and quality of service for the consumer. Internet bandwidth consumption, internet access via ISDN, DSL, services, CDML, GPRS etc. are just some of the technologies that have either grown exceptionally in Pakistan or have had a favorable reception by the local consumers(Hydir, 2006).

The success story telecom sector has been recognized world over and Pakistan has received GSM award of government leadership among 60 regulators of the world in 2006 and ITU awarded G-Rex award to PTA, which is the testimony of its success (Sargana, 2006).

Internet Infrastructure 3.1.7. Rizvi(2005a) argues that international telecom traffic has almost been doubled in last three years (726m-minutes in 1998/99 to 1250 m-minutes in 2001/02). Initiatives were taken to increase the network capacity through up-gradation of SEA-ME- WE-340 from 0.4 m to 2.8 million MIU kms. The Pakistan second cables SEA-ME-WE-4 has also

39 “P.T.C.L introduced new value added services”, The Business Recorder, 21st May, 2001. 40 South, East Asia, Middle East, Western Europe-PTCL 38000 KM long submarine trunk cable which allows internet links of Pakistan with rest of world. Pakistan is member of consortium financing the cable.

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started operating since January 2006. Two more optic fiber cables are also planned to be laid down in this year in private sector.(One by TWA Transworld Associates (Pakistan’s first private undersea optic fiber cables operator-TWA-1 has landed its cabling station in Karachi which has also started working to meet the urgent need for reliable international connectivity)). Pakistan has direct bilateral arrangements with 52 countries, whereas connectivity to remaining countries is through transit arrangements. Pakistan is offering Internet dial-up access (local call of no time limit) for Universal Internet using numbering scheme e.g. UIN (131-XXXXX).Rapid expansion of ISPs resulted in small enterprises, to date 85 ISPs have planned services using 131 Access-Code & 65 ISP’s are in actual service(NetMag,Feb 2006).

The Internet bandwidth obtain ability in Pakistan has increased from 35 Mbps to 410 Mbps in last three years. An educational Intranet ranging from 256Kbps to 6Mbps has been initiated for 56 HEC accredited universities. In addition to the local content, an aggregate 4 Mbps international connectivity (up-gradable to 32 Mbps) will also be provided. Optical Fiber Cables (OFC) have been laid for 16 universities, out of which six universities are ready for using Intranet/Internet facilities.41.

About 70% reduction in long distance (NWD) and international call rates has been done during past three years. Tariff reduced thrice during the year 2003-2005 and new telephone installation charges are reduced by 50% and in some areas it has been made free. Furthermore, substantial savings on telephone shifting charges and other services is offered to customers. Tariff of domestic bandwidth/ leased lines reduced giving more incentive to ISPs and mobile operators. Bandwidth rates reduced from US$ 90,000/E1/month (1998) to 6000/E1/month (present). In addition “Econo-Bandwidth” is available at US$ 3000/E1 per month42.

In short, it can be said that technological advance brought forward by the many dimensions of the IT revolution, has completely transformed the telecommunication

41 1. “Prospects for Pakistan IT industry”, The News International, May 6, 2001. 2. “Status Of Pakistan IT Industry”, The Dawn, February 28, 2005. 42 “Significant Potential for IT” ,The Dawn, 20th April, 2005,

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industry defined in the broadest possible way in the world and in Pakistan as well. The relative advantages of the IT revolution lies in the optic fiber infrastructure in advanced countries like U.S, Japan, U.K and other. It is also adequately present in Pakistan. Telecommunication infrastructure of Pakistan does not necessary lag behind that of advanced countries and have all latest technologies in telecommunication being used by all these countries.

IT Human Resources Status in Pakistan 3.1.8. Human resource is the major element of success of any system. Human resource development is central to adoption of technology and promotion of sustained development. Pakistan having about 140 millions population has great talent to be used in IT projects. No doubt, it has late entry in IT but it is now at that level, where its neighboring country India was 14 years before. Among others, one of the major problems as Ali(2005) indicates to this slow IT diffusion in the country is lack of IT trained and expert manpower. The literacy rate and the number of skilled workers available to provide technical support in IT are comparatively low in Pakistan.

Therefore, to realize the need of time, in order to take-up the challenge and as a part of a comprehensive master plan for manpower development, an aggressive program to upgrade IT education at various levels has been undertaken by the government under the auspicious of IT policy and action plan. Over 200 institutions including 26 recognized universities have started different IT education programs. Free Internet connections are being extended to public sector universities under an agreement with the private sector ISPs & PTCL. The setting up of virtual university43 is one step forward in extending the frontiers of quality IT education in the country(Zaidi & Tahir, 2002).

A large number of educational and professional institutions have been established in the country for imparting IT education and few others are on way(Khan and Shah, 2004). Kazmi(2005) argues that human resource development has been assigned the top priority

43 Virtual University has been established under an ordinance promulgated by President Pervaiz Musharaf on October 11, 2002, to provide education & training in Information Technology, Business Management and emerging sciences through satellite, television & Internet.

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for the development of local IT industry and to position Pakistan as an important player in the international IT market. Under this plan a large pool of academically as well as technically skilled IT manpower is being developed to meet the local and expert need. The policy envisage the establishment of specialized IT educational institute, offering of scholarships for higher IT education in the filed of IT, establishment of IT boards, establishment of IT parks, Software houses, IT cities, in all major cities, National Testing and accreditation services of educational intranet, strengthening of existing IT institute and hiring faculty from abroad. Hundred of millions of rupees are also being payout in upgrading existing public sector universities for IT education. Table 3.2 exhibits an approximate no of available IT professionals in Pakistan. In this regard Hussan(2005), however, criticizes the large scale establishment of IT institutions by saying that there are serious imbalances at various skill levels and these institution are giving low level and sub standard education and producing only lower level white-collar labor force. This has lead to critical shortage of highly skilled workers, on the one hand and surplus of while- collar labor force at lower skill levels, on the other hand. He urges that a proper policy formulation to improve IT education quality from the government side could avoid these mismatches.

Zaidi & Tahir(2001), Bhatti(2003), Ali(2005), Hussain(2005) and Syed(2006) also indicate the presence of following pitfalls in IT education systems going predominant in Pakistan 1) proliferations of standard in IT education 2) lack of competent IT faculty in universities 3) obsolete material is taught by most of the universalities in Pakistan 4) lack of imparting adequate analysis and design skills 5) lake of latest teaching methods with video conference concept 6) outdated text books etc.

Zaidi and Tahir(2001) say that this pathetic state of IT education can be overcome by appropriate curriculum development, faculty development, students scholarship and financial support, quality assurance through monitoring and accreditation system, market links through internships, projects, placements services, IT application etc. They further say that by establishing world class computer laboratories, contacts, and collaboration with other universities in the world, development of strong and cohesive industry

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oriented educational and research programs help organizations to accelerate their productivity through computerization, involving industry in helping IT educations like in advance country44, to impede the outflow of valuable human resources, and to attract and

retain competent IT peoples in the country by offering them high salary.

Table 3.2: Approximate Number of IT professional in Pakistan

Source Pakistan & Gulf Economist, December 5-11, 2005. pp 16.

Pasha(2005) also suggests that the government can assure the quality education in private and public institution by developing quality assurance tools and procedure, asking the institutions to update curriculum in the light of international recommendations, start new and demand oriented programs, maintaining academic level of excellence in light of voice of industry and developing materials and processes to propagate IT.

To sum it up, it can be said that like all other components, human capital is also indispensable for IT systems. Pakistan is rich in human resources, which matter most for economic advance, as well as other natural resources. Its’ 140 million population has enormous potential to be trained in any specialized field including IT. Pakistan has talent but there is a need to properly train and provide directions to the people. Human resources need to be developed in the right direction. The government of Pakistan now is trying at all level best to train the masses to become IT experts by offering different programs. However, there is a need to check the quality of the IT education and the usage

44 In America AT & T in 2003, has committed $150 millions to provide Internet access to all schools.

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of the funds being reserved for IT uplift. In order to put its economy on track and to compete with the growing economies of the world, Pakistan needs to quickly take steps to train and bring its workforce to the international education standards, incorporate new technologies and modern management practices into its existing industries, and to bring extreme focus on building an information based economy by upgrading the technical and managerial skills of its people.

Conclusions

3.1.9. Information Technology has proven to be the key technology of the past three decades. Over last two decades it has developed at a breakneck speed and has brought tremendous opportunities for mankind globally. In Pakistan IT is comparatively a recent arrival but it is progressing smoothly. Realizing its importance, Pakistan started introducing IT to meet challenges of globalization era. Pakistan has accepted the challenge of the 21st century by making efforts in the development of Information Technology. IT has been introduced in every discipline, from shopping to banking and education, entertainment or travel etc. Every activity has been made possible by the use of advanced technology. Large satellite dishes, mobile phone, Internet and cable systems have been penetrated into the Pakistani culture. Newer and IT friendly methods are being acquired to keep people abreast of the latest information about the innovation and inventions, going on around global. The growth in Pakistan IT industry has been unleashed in the past years. Almost every organization working in Pakistan now is using IT for its work. The Government of Pakistan has laid great emphasis on enlarging the scope and intensity of IT in a variety of filed. IT has got massive attention from the government at present. The government has liberalized its rules with regards to IT and offering different incentives to boost up IT usage, through comprehensive policies regarding IT, telecom deregulation, cellular mobile and broadband. These policies have given strategies direct and set objectives for improvements of Information and Communication Technology in the country. Pakistan's IT industry has everything one may need. A modern and rapidly expanding telecommunication system, experts from various disciplines, highly skilled and economical workforce - all this backed by an

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unmatched investment package offered by the Government of Pakistan. The government is building IT skills by liberalizing its laws for establishing IT institution.

Despite having all this the IT industry in Pakistan has not yet achieved sufficient maturity for it to fulfill its needs and to face severe competition in the international market. The country has people with technological skills but need to be refined. Pakistan has a relative advantage for telecommunication but it is rather week in hardware and software. The IT hardware industry is facing death while its counterpart-the software industry is flourishing. It is urgent need, therefore, to create business models and new plans for growth of hardware and quality software in the country. The substandard educational institutions are imparting low quality IT education in the country and earning a bad name to it. . These institutions are needed to be monitored for quality education to produce world class IT experts.

All in all it is no secret now that Pakistan has emerged as one of the most technological enhanced nation in the region. In very small span of time the government has managed to turn around the economy to make its base more along the lines of technology oriented industry rather than conventional industries of yore. One of the core changes has been the shift of the government from telecom service provider to market regulator. But, the success of future technology industry in Pakistan is directly linked with the success of Pakistan’s image and stability. In this era of globalization the country is taking a tempo towards the contemporary epoch of telecom revolt. The growth rate in each and every division of the sector is remarkable.

To conclude all above discussions it can be said that though IT comparatively got late and slow introduction in Pakistan but the journey which started from 1960s is still going on. IT has priority on government’s every policy and agenda now. The government of Pakistan now is taking each necessary step for diffusion of IT in the country. Pakistan no more remains a silent observer to the spiraling growth of the IT globally but it is a true user of all its latest tools and techniques.

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Section II

IT In Banking & Manufacturing Organizations.

General 3.2.0 Information Technology has become, within a very short time, one of the basic building blocks of modern industrial society. IT has become an integral part of the economy of every country, and is playing an ever-increasing role in the industrial and service sector. Drucker(1992) pointed out in early 1990s that the classical factor of production, land, labor and capital are becoming secondary and knowledge as the primary resource for the new economy. Lang(2002) also observed that a transformation is occurring from the old economy to the new economy, from an emphasis on the main factors of production, namely capital, land and labor, to an emphasis on information, knowledge and technology. The new economy is moving beyond bulk material manufacturing to designing new technologies, beyond processing physical resources to processing knowledge, beyond applying raw energy to applying ideas. Vasudevan(2003) predicts that now obsolete business principles, practices and technologies will not survive in the knowledge economy. Thus a review of management principles, concepts and tools is timely. Organizations need to be innovative to survive and IT can be a great tool for all those innovations and of course survival.

Significant advances in the related technologies of computers, telecommunications, data access and storage devices, and software packages have created a wide spectrum of new opportunities for organizations in the world as well as in Pakistan. The speed, cost, size, and capabilities of the new IT continue to improve rapidly and there appear to be unlimited applications that could be computer-enhanced.

The Pakistani Government and the business community in the country have fully understood the value that automation can adds to their commercial concerns, by driving down costs, improving products, reducing time to market and providing quality services to their customers. Therefore, IT is being used in almost all government and private

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organizations. According to a study conducted by the ministry of Manpower, Labor and Overseas government of Pakistan in the year 2004, it revealed that the introduction of IT in the country has influenced positively the organizations in term of increased productivity, marketing and reducing per unit cost. It leads to varying degrees of improvements in job, living standards, fair treatment to employees, level of worker’s satisfaction, capability enhancement, balancing family life with work etc. in almost all sectors of Pakistan. By emphasizing the importance of IT Sohal et. al(2001) say that IT now is being applied throughout all areas of both manufacturing and service industries including banks. However, companies are only achieving moderate benefits from their IT investments. Predominantly the major benefits achieved across both industries have been limited to improvements in productivity and reduction in costs.

It has been observed in the literature that IT is now not being used only as a traditional cost reduction tool but also as a strategic tool. This trend seems more apparent both in manufacturing and service sectors. For attaining greater productivity from IT, organizations in the service industry are employing IT to enhance the value of product and services to a greater extent than that of manufacturing. There is less utilization of IT in manufacturing sector and possible indicators of poor IT utilization by manufacturers are due to a result of failing to match IT capabilities to organizational needs. Conversely, IT departments in manufacturing organizations have more of a reporting, consultant type role to those responsible for strategic planning and do not have as direct a role in strategy development as seems to be the case in service industries (Poku, 2002, Anadarajan. 2000). It has also been noted that economic factors, insufficient top management supports and difficulty to justify cost were the greatest impediments to IT success in both industries in the past, but now with top management commitment having a higher response in the industries, these problems are being reduced gradually(Sohal et. al, 2001;Sherer, 2004). As a backbone of Pakistan economy, the manufacturing and banking industries are the biggest beneficiary of all the IT innovations. Although Pakistan is not yet self sufficient in all IT tools and relies mostly on imported hardware, software and telecommunication equipments but its IT industry is on take off stage with all push up of Pakistan’s Government.

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The ensuing discussion highlights in detail the status of Information Technology usage in banking and manufacturing industries of Pakistan.

Information Technology In Banking Organizations 3.2.1. Arthur(1996) says that service, the ‘tertiary sector’ of the economy comprises of four distinct groups: 1) distribution services, 2) producer services, 3) social services and 4) personal services. Within the producer services sector, it has been the financial (including banking & finance) and other business, accounting, engineering, and architectural services that have grown most rapidly. Service sector also covers a wide gamut of other activities like trading, infotainment, real estate, transportation, security, courier, management and technical consultancy etc. Akhter(2006a) posits that technology helps to catalyze efficiency in the provision of financial services and ultimately in determining the winners in the intensely competitive financial markets of the future. Technological breakthroughs have forced fundamental changes in the financial industry. Strategic business plans have taken into account new ways of doing businesses, launching e-banking, and using information and technology for developing better internal control, more sophisticated risk management systems and better and convenient customer services.

According to Akhtar(2006a) in addition to product innovation, globalization, deregulation, macroeconomic performance and priorities, universal banking, risk management, changing role of and demands on the regulator, the technological advancement is also one of these factors which are generally believed to have been the major drivers of change in the financial industry world over. Biswas(2005) reports that during the last two decades there has been revolution in the technology of banking. The micro electronic technology has dramatically reduced the costs of transmitting, processing and storing information. Bruce(2005) narrates that IT has basically been used under two different avenues in banking. One as communication and connectivity and the other is as business process reengineering. IT enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and

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helps the financial intermediaries to reach geographically distant and diversified markets(Bruce, 2005).

Poku(2000) submits that computerization is a positive step to bank’s growth as with the aid of computer bank work can be faster. Tremendous rises can be expected to be obtained in the business after the use of computer. Efficient and prompt service to the customer, timely completions of statutory requirement, timely required information are possible. Banking sector is one sector where the all-invasive influence of IT is felt very strongly. Banking is no longer confined to brick and mortar firm. There are alternative delivery channels now, essentially technology driven like ATMs, Internet banking, mobile banking, tele banking, e-banking etc., which have ushered in the era of convenience banking. Technology use no doubt has resulted in tremendous reduction of transaction costs, speedy execution of voluminous transaction, introduction of new innovative products and services (Khan, 2002).

Shere(2004) demonstrates that IT has made possible the creation, valuation, and exchange of new complex financial products on a global basis. Technology synergies have enlarged the set of productive capital investments while lofty equity values and declining prices of high tech equipment have reduced the cost of capital. The result has been a veritable explosion of spending on high tech equipment and software, which has enlarged the growth of the capital stock dramatically over the past five years. In the banking industry inter-branch and inter-bank transactions take place electronically. Millions of account holders and thousands of internal users can access and transfer electronic information and make online transactions(Shere, 2004).

Information Technology in banking is not new, as according to the banking world of Finland the systems and connections between banks have based on the use of IT for a long time. All over the world banks are increasingly deploying IT to their operations to improve productivity and enhance customer services. The role of Information Technology has grown and simultaneously changed in the banking sector over time and financial institutions are one of the largest investors in information systems (IS). In

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1960’s IT was used to raise the cost-effectiveness. In the 1970’s IT was used as a strategic competitive possession and in the 1980’s and onward IT became a key-factor in increasing new services(Bhide,1997). The significance of delivering financial services is enormous for efficiency both in terms of cost of product and customer satisfaction. Modern technology like IT has completely changed the channels of delivering financial services.

The financial services, particularly banking have been the major users of IT and communication technologies. According to a survey by Ernst and Young and the American Banker, the industry’s Information Technology (IT) spending is expected to reach unprecedented heights in the late 2000s. Sievewright(2003) says that financial service firms continue to spend heavily on technology. He investigated that worldwide spending top $337 billion in 2003, and it is a 2.3% increase over 2002.

In the last decade alone, bank’s spending on IT has risen rapidly from some $14bn in 1990 to 20bn in 1995 and 30bn(approximate) in 2000(Gupta & Collins, 2001). This diffusion of IT has began to derive benefits in term of lower cost, employee productivity(Strachman, 1994), increase in transaction throughput(Karr, 1996); overall profitability(Teixeira, 1995). Current statistics shows that workers in the finance industry use computers more than any other industry45.

According to Terry(2005) technology has changed the contours of three major functions performed by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further, IT and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets(Terry, 2005). Many successful financial institutions have clearly demonstrated that information systems and technologies can be a powerful competitive weapon that can be used to capture market share, improve customer service, reduce operating costs, and create new products and services(Lederer & Mendelow, 1988). Therefore, it can be said that IT is the means of

45 Bureau of the Census, Computer Use in the United States: October 2003:

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increased production in the banking industry, with technology revolutionizing the moving and storage of money, and the distribution of financial products have become easier.

Mayer(1987) while narrating the history of computer usage in banking demonstrates that the use of computers in banking first began in the early 1950s, when the first large commercial computer was built for Bank of America. Initially, computers were used to process check transactions through magnetic ink character recognition. With the introduction of first automated clearing house in the early 1970’s electronic funds transfer (EFT) was made possible, and then ATM was introduced. Automated Teller Machine (ATM)46 is one of the most significant technological investments made by the commercial banks. ATM’s introduced the power of computer technology to the general public and made banking convenient for consumers. Today, ATMs deliver banking service 24 hours a day, 7 days a week to more than 22 millions peoples only in USA.

Koepp(2002) says that banks increasingly have turned toward ATM and other computer technology like prepaid cards, loyalty cards, debit cards and even chip cards, to reduce the high costs associated with maintaining traditional “brick and morter” branches staffed by tellers. ATM transactions, along with transactions made by telephone, have replaced transactions formerly made with human teller. Computer Technology is used by commercial banks to reduce costs and survive the competitions. Consumer acceptance of ATM’s and touchtone telephones to make financial transactions has allowed banks to reduce the number of costly transactions made with human teller. Subsequently, banks have reduced the employment of tellers and have converted many of the remaining teller positions into part time jobs. In view of this Koepp(2002) predicts that in the future commercial banks are expected to achieve a rise in real output, while providing more services with fewer employees.

Franke(1987) also put forwards his view to the importance of IT in banking by saying that financial sector appears to be a clear leader in the growth of IT. It was among the

46 Don Wetzel developed ATM in 1973 and it was first installed at Chemical Bank in New York (Shelly et. al(2004) pp5.39.

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first to incorporate electronic data processing in its operations, through check handling, bookkeeping, credit analysis and ATMs. Across all industry sectors, the earliest applications of IT were directed towards reduction of personnel costs in such labor- intensive operations as accounting, payroll and purchasing. Since then, computing and communication technologies have effected all functions of the modern corporation, gradually displacing traditional labor and capital inputs, through such applications as electronic order entry, electronic data interchange, office automation, telecommuting, expert systems, robotics, object oriented programming and point of sale settlement, among others. The recent trend of IT-led restructuring and reengineering has accelerated the transformation of business process. Martini(1999) has also found that the banking industry has used IT to enable increase in the volume of transactions as well as the development of new products and services to attract customers.

The banking applications have ranged from back-office (check and accounts) processing, mortgage and loan application processing, and the electronic funds transfer to more strategic innovations such as automated teller machines and new kinds of securities. The management information systems, distributed computing devices, open systems, high- speed data networks (LAN, MAN, WAN, ISDN, DSL, etc.) relational database management services (RDBMS) have been important development milestones in IT with major impact on financial services. All these technologies are being used extensively by the banking and financial services sector. Nsouli(2002) notes that IT expenditures by the US banks have recorded a compounded annual growth rate of about 8.5 per cent. He says that given the magnitude of the banking industry’s growing investments in IT over last two decades, large increases in productivity might have been expected.

As discussed above IT has been an integral part of banking system since almost four decades. IT has always helped the banking industry to serve its customers in better way in direct deposit, online loan applications, ATM withdrawals etc. However the arrival of Internet Technology in banking system has taken a new shape and style with a blend of convenience and satisfaction. Banking from a customer’s bedroom, office or anywhere in the world has made its way into banking system with the advent of Internet technology.

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Sievewright(2003) also highlights the importance of usage of Internet in banks and say that the Internet with its potential has changed the very nature of banking and therefore growth potential for online consumer banking is enormous. According to his estimates, there are over 10,000 banks operating on the Internet in the United States, performing a variety of banking services. A large part of banking now is being conducted online. Sievewright(2003) further adds that this growth of Internet banking has also raised a host of legal issues, including security, authentication, consumer protection and privacy and the banks have to overcome these problems.

Many other researchers have also investigated the impacts of IT on banking, Zhu et al (2004) for example have found that overall impact of technology on the banking industry is positive. They investigated that the only need is that banks need to carefully consider where they target their technology efforts and expenditure. Their research specifically, has indicated that an investment in customer-focused technologies provides a good return on investment. Other researchers including Shaanhan(1995) through light on IT impact on banking employment. According to them technology has had an impact on employment in the banking industry but it is not the only cause for the job declines. The numerous mergers and failures that have occurred in the industry also have taken their toll on employments. Prasad and Harker(1997) proposes in their study that additional investments in IT capital may have no real benefits and may be more of a strategic necessity to stay even with the competition. However the results of their study indicated that there are substantially high returns to increase in investment in IT labor, and the retail banks need to shift their emphasis in IT investment from capital to labor.

Information Technology & Banking Sector Of Pakistan.

3.2.1.1 The financial sector in Pakistan can be grouped into banking and non-banking financial institutions(NBFIs). Banking institutions include large public sector scheduled banks, private sector banks and foreign banks, while NBFIs include development finance Institutions (DFIs), private sector investment banks, leasing companies and modarbas. The financial system in Pakistan has grown substantially, benefiting from multi-pronged reforms. These reforms have been pursued persistently and vigorously over a decade or

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so and have supported economic growth. The inefficiencies and weaknesses which were typical of banks’ operations in the pre-reform era have been reduced radically. Liberalization and deregulation, core pillars of the reform measures, have served to enhance the size of the banking system both in terms of the number of banks and growth in credit, besides instilling a degree of competition in the banking industry. (Akhter, 2006). Banking industry in Pakistan has seen great transition during fifty-nine years of his history, especially since early 1970s. The banking nationalization in 1974 and then privatization and liberalization in early 1990, are termed as major restructuring years of the entire banking industry of Pakistan. At the time of inception of Pakistan in 1947, only few bank branches existed in the country, which were concentrated mainly in the urban areas. Moreover, Pakistan was without a central bank of its own till June 30, 1948. However, by early 1990s the banking sector had spread to every nick and corner of the country.

The market for banks is diverse in Pakistan comprising Nationalized Bank, Private Banks and Foreign Banks. In 1993 there were 33 commercial banks in Pakistan 14 being local & 19 foreign. By the end of 2001 due to government liberalization policy to setup a private bank, the number has increased to 43, 24 being local & 19 as foreign. But by the end of 2005, with some mergers there were 38 commercial banks 14 being foreign and 24 being local. In addition to these commercial banks, there are four specialized banks to meet the specific requirements of different sectors of the economy. These includes: Agriculture Development Bank of Pakistan, Federal Bank for Co-Operatives, Industrial Development Bank of Pakistan & Punjab Provincial Co-Operative Bank Ltd. Total number of scheduled banks branches stood at 7,075 as on 30th September, 2005. There is a phenomenal progress in banking sector of Pakistan. It recorded an increase of 99% growth in profit in only one year i.e 200547. NBP, HBL, MCB, ABL,UBL are considered five large banks and are very dominant in the banking industry , in term of total number

47 The daily Dawn: “Banks profit grew 99pc in 2005”, Tuesday March 21, 2006. pp9. Mahmood Javed (2006) “Another productive year for Banks” Money Plus July 17,2006.

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of branches, deposits and advances, collectively accounting for 78% and 77% of total deposit and advances respectively. Most of the local banks are in private sector now, and many of them have started business since 199248.

The banking sector of Pakistan has a number of challenges to face in this century, encompassing economic, social and policy and procedural fields and IT etc. In Pakistan almost all national and multinational banks are using IT to increase their performance. The introduction of computer in banks in Pakistan started in 1965 when the main commercial banks in private sector i.e. Habib Bank, United Bank and Muslim Commercial Bank started acquiring computers to regulate their banking work. Since that time there is a massive investment in IT in banking sector (Akhtar, 2006b). This is bore out by the fact that during fiscal year 2003-2004, over US$ 200 millions was invested by the financial services sector into IT products and services49. Shafiq(2001) says that not only this but also the banking sector has dramatically increased its dependence on use of IT, and it is evident by the growth in the number of branches that are connected online. Most of the Pakistani banks (local and foreign), have launched their web sites and have uploaded many things on web including accounts opening forms and loan applications. Likewise, the number of Automated Teller Machines(ATMs) and the use of automated cheque clearing and other back end systems within the banking community have increased50.

There have been great advances in Pakistan banking technology in the past several years. The most recent automated banking systems like Misys, Sibel, and Fidility etc are being installed in many of the Pakistani banks. Kazmi(2004) points out that most of the banks operating in Pakistan however, have been making huge investments in three key areas namely 1) expansion of the branch network 2) up gradation of the existing infrastructure 3) adaptation of the new technologies with their ultimate objective is to offer a complete electronic banking facility.

48 Pakistan banking infrastructure statistic: State Bank of Pakistan’s report 30-09-2005. 49 “Status Of IT Industry Of Pakistan, The Dawn, 28th February, 2005. 50 Approximately 1400 ATMs have been installed by different banks till July 2006 in different cities of Pakistan (The Dawn, August 22, 2006).

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Table 3.3

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Syed(2006) however argues that electronic banking does exist in Pakistan but its use at present is restricted to big companies and multinationals and the pace of automation in multinational banks is greater then the local bank.Further, in banking software foreign companies are the real beneficiaries of IT projects in Pakistan and about 75 per cent of all software spending on most recent 12 projects in the country, especially those by large banks, are awarded to foreign companies51. Syed(2006) stresses on equal participation of the local software companies as well.

Ahmed(2003) effectively argues that huge investments by the commercial banks in technology has ushered a new era of convenience and improved quality of services. The banks are offering Internet and mobile banking that has made major impacts on their performance. In the end to mention another big achievement in payment area is RTGS setup by State Banks of Pakistan for interbank settlement. All above discussion can be concluded in a way that a lot has been achieved and lot more remains to be done and at a much faster pace in banking technology. It is encouraging that the IT initiative is being fully supported by the regulators very cautiously towards development of complete e- banking status in Pakistan. It is therefore, predicted that the future of the banking industry’s IT efforts and its spending will continue to increase in importance for the transition of traditional banks into virtual banks. The recent statistic revealed that with this aim the total spending on IT is projected to increase by about 100 percent by next five years. Table 3.3 presents a real picture of e-Banking infrastructure statistic of Pakistan.

Information Technology in Manufacturing Organizations 3.2.2 Manufacturing is the process of converting raw material into products. It encompasses the design and production of goods, using various production methods and techniques. Manufacturing is the backbone of any industrial society. The world manufacturing is derived from the Latin ‘man factus’, meaning made by hand. Before industrial revolution most things were made by hand but only the very rich could afford

51 The State Bank Of Pakistan’s automation project (Total volume of 34 million US$) has been awarded to M/s Hyundai Information Technology Co. Ltd. That is the biggest IT projects in Pakistan: NetMag Aug05.

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to have things designed and made for them. Today every body can afford most of machine made things(Morisi, 1998).

Automation in manufacturing organizations goes back to 1900, around the year 1900, factory mechanization facilitated mass production to meet the consumers’ demands for improve products. In the year 1930, transfer lines and fixed automation were created to facilitate mass production. This resulted in the development of programmable automation. By the year 1950, numerical control (NC) was developed as an innovative approach to programmable automation. With the development of commercially available computer technology, the application of computer in manufacturing started to emerge by producing a variety of new technologies. By the year 1955, the introduction of computer aided design(CAD) and development of NC resulted which lead to the evolution of system like computerized numerically controlled machine tolls (CNC). By the year 1970, development in CAD applications and Computer Aided Manufacturing (CAM) based systems, Computer Aided Engineering(CAE),Material Resource Planning(MRP), Flexible Manufacturing Systems (FMS),which are collectively named as AMTs- Advanced Manufacturing Technologies was made. AMT provided flexibility as well as data driven computer integration for a manufacturing organization, in which the manufacturing technology utilized is intelligent enough to urge forward the activities with less human interventions. Industrial robots, automated guided vehicles, and automated storage and retrieval systems are also introduced. These applications can be connected via Local Area Networks(LAN) to from Computer Integrated Manufacturing(CIM) and externally, across organizations and space, via Electronic Documented Interchange(EDI) (Sohal, 2001).

For every industry, each decade is blessed with a particular buzzword or a set thereof. In the manufacturing sector, the pride of place has been occupied by the world ‘technology’. The technology advancement in the world over is so rapid and wide spread that isolates manufacturing and technology from each other is merely an impossible proposition. IT is becoming critical to many manufacturing organizations that want to be a world-class manufacturer as IT often provides a manufacturing-based advantage. IT can assist

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manufacturing firms in developing their strategic roles. In today’s competitive global market, for the survival of any industry, manufacturing companies need to be pliable, adaptive, responsive to change, proactive and be able to produce a variety of products in short time at a lower cost (Ho, 1996). Hence, manufacturing companies are compelled to seek advanced technologies by integrating manufacturing facilities and systems in an enterprise through computers, its peripherals and communication network to transform island of enabling technologies in to a highly interconnected manufacturing systems. Today, the capability of producing high quality products according to diverse customer requirements with short delivery times has become the characteristic of order-qualifiers for manufacturing industries. Furthermore, non price factors, such as quality, product design, innovation and delivery services are the primary determinants of product success in today’s global arena. Implementing integrated advanced technologies is an effective approach towards solving the problems of decreased productivity, labor cost and consequent rise in unit costs, which are continually plaguing present day manufacturing manager. Implementing advanced manufacturing technologies(AMTs) provides opportunities to achieve competitive advantage in an intermediate-to long-term time frame (Sohal, 1999).

The Internet based distributed systems motivated the industries to utilize IT in all areas. Advance in software technologies have been transforming the world of integration into compatibility systems and devices by establishing an open connectivity standards, agreed by the manufacturers, which will provide plug-and-play communication and interoperability between field devices, control systems, and enterprise wide business applications(Lang, 2002).

Pakistan Manufacturing Sector And IT 3.2.2.1 Pakistan industrial sector remains a relatively small part of the total economy. Pakistan’s manufacturing sector has grown rapidly but remains inefficient and lacks diversification. In practice, Pakistan’s industrialization process has largely been governed by trade and tariff policies which are driven by revenue and/or balance of payments considerations rather than by a coherent industrial policy framework (Kemal, 1999). The

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Pakistan developed a substantial industrial sector in a very short time. The share of manufacturing in GDP was 14.8 % in 1999-2000 but increased to 18% in 2004-05. Almost 24% increase in six year. Pakistan’s economy, which grew at 6.4% in fiscal year 2003-2004, achieved a broad based growth of 8.4% in 2004-2005. The overall manufacturing accounting for 18.5 % of GDP, registered an impressive growth of 12.5% against the target of 10.2% and last year’s achievement of 14.1%. Overall, manufacturing is growing at a much faster pace than agriculture and services and if this pace is sustained, its share in GDP is likely to rise further in the medium term52. Various factors including accommodative monetary policy, financial discipline, consistency and continuity in policies, strengthening of domestic demand are continuously improving to improve contribution of manufacturing sector. In Pakistan both large-scale, multinationals, local and small scale domestic and international companies are operating which are producing goods of almost all kinds(Saeed, 2003).

Table 3.4 Sectoral Shares in GDP 1999-2000 and 2000-2002.

Sr. Sector Percentage Percentage Percentage No (1999-2000) 2000-2001 (R) 2001-2002 (P)

1 Services 49.1 50.2 50.9

2 Agriculture 25.9 24.6 24.1

3 Manufacturing 16.7 17.5 17.7

4 Others 8.30 7.70 7.3

Total 100.00 100.00 100.00

Source: Economic Survey of Pakistan, 2000-2001, & 2001-2002 pp. 10 Though the introduction of IT in Pakistan started in 1960’s but it’s wide spread diffusion has started in the last few years. Much attention has been focused by the government on development of IT infrastructure in the country on all levels. The government also encouraged and promoted to the manufacturing sector to use IT at all levels. Revolutions beget openings of one kind or the other. The IT revolution would semblance to have opened a beneficial window of opportunity for the Pakistani manufacturing organizations. In manufacturing sector of Pakistan, Packages Ltd. was the first company,

52 Pakistan Federal Bureau Of Statistics, 2004.

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which started using computer in 1957. After that many other companies in this sector started using computer to increase their productivity. Now IT usage in manufacturing and industrial sector is very common. Within the industrial sector, the use of Enterprise Resource Planning software packages such as SAP and Oracle has become commonplace, companies such as ICI, Caltex, PSO, Packages, Simens, KSB pumps, Pakistan Tabacco, Honda Atlas and tens of others have deployed high end ERP (SAP) solutions. All manufacturing organizations including textile are investing heavily into specialized software and IT solutions to reduce costs and improve quality. Saphhier Textile, Kohinoor, Nishat, Mehmood and Hasni Hosiery etc. have ongoing IT projects worth millions of rupees53.

Conclusions 3.3.0. IT has revolutionized and redefined all aspects of human interaction in social and business scenario. It has turned the world into global village where limits of time and location no more apply. The companies use IT to get improved efficiency and effectiveness. This use has grown at an astonishing rate over the past three decades. Now, Information Technologies permeate nearly every aspect of modern business operations and communications. As computing and networking machinery proliferated into every aspect of business life, the pressing need to manage these technologies effectively has grown accordingly.

Realizing the need of time like other countries, in Pakistan, banking & manufacturing industries are also using IT to increase their performance in almost all areas. IT has become means of better production and services in these industries. Advancement in production and communication through IT has changed the nature of working for both the industries. In addition introduction of Internet and advancement in computer connectivity have given companies an opportunity to conduct their business on-line. According to above discussions, the banking and manufacturing industries are seemed to be more benefited with IT. Moreover, it is also observed that IT has changed the nature of business of both the industries. In banking, IT is being used mostly for customer oriented applications and in manufacturing for traditional systems.

53 Report from Federal Ministry of Industries, 2004.

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Chapter

4 Factors Affecting Adoption Of Information Technology

Introduction 4.01. The use of technology and Information Technology in particular is essential to the successful operations of the today’s organizations. As discussed in the previous chapters Information Technology now is one of the major factors improving productivity and performance of the organizations. As the introduction and adoption of any new technology is encountered with many challenges and obstacles, so is the case with IT. A number of factors appear to impede or facilitate the diffusion of IT, in both developing and developed countries and this is particularly true for small and big organizations.

The literature has identified many organizational and systemic factors that may affect an organizations’ decision to adopt an innovation. These moderator factors include culture, political, social, organizational, managerial, economical and technological characteristic etc.(Gopalakrishna & Dmanpour, 1997; Lai & Guynes, 1994; Fichman and Kemerer, 1992; Strassman, 1991; Schein, 1990; Rogers, 1983). In addition, as concluded by McFarlan(1992), after studying sixteen research papers, and by Hanaa et. al (1995) from their comprehensive study, that the adoption of new technology in different countries has met also with different other barriers as well i.e 1) Lack of organizational coordination and conflicts 2)Lack of management support 3) Training understanding of technology 4) The availability of trained staff. 5) Skill shortage and 6) lack of expertise. Hanna(1994) in his study for World Bank has also identified many hindrances which developing countries normally face for diffusion of IT. These are summarized in Table 4.1.

This chapter discusses in detail the cultural, social, economic, human, political and all other factors which may affect technology diffusion in any organization in the world and in Pakistan as well. It also highlights different important issues relating to these factors as well. The conclusion of the discussion is given at the end of the chapter.

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Cultural Factor 4.1.1 Culture is a term that was originally developed in the field of Anthropology and has recently become a prevalent research area in the organizational studies. In 1952, the anthropologists Kroeber and Kluckholn claimed that there are more than 150 definitions of the concept of culture and proposed to define it as: “Culture consists of patterns, explicit and implicit of and for behavior acquired and transmitted by symbols constituting the distinctive achievement of human groups including their embodiment of artifacts”. Baligh(1994) conceives of culture in term of its parts and components. According to him, the parts are: family, language and communication, religion, government and politics, education, transformation and technology, society, economic structures and activities(business) and the components of culture are: truth, beliefs, values, logic, rules, and actions.

Schein(1990) links the culture concept to the dual pressures upon human beings to face external adaptation and internal integration he proposes defining culture as: (1) a pattern of basic assumptions, (2) invented, discovered, or developed by a given group, (3) it learns to cope with its problems of external adaptation and internal integration, (4) that has worked well enough to be considered valid and , therefore (5) it is to be taught to new members as (6) the correct way to perceive, think, and feel in relation to these problems. So according to him culture then concerns with a group of people who share a common understanding and meaning of things around them. It is a shared systems of meaning (Trompenaars,1993) or the collective programming of human mind that distinguishes members of one group from another(Hofstede, 1983). This programmed mind was well defined by Kolland(1990) as : “What society has impressed upon a person from the basis from which individual characteristics grow, which in turn make an individual unique among other members of society”.

Trompenaars(1993) proposed a framework to understand culture. His model indicates that “the products of culture(observable artifacts) which is seen every where are symbols of the norms and value of the people living in that place which in turn are based on fundamental basic assumptions about human existence and life.”

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Many studies are also found in the literature that captures the concept of national culture. For example Hofstead(1983) in an early study proposed that national culture and values as they effect the work environment and its management, could be categorized on the basis of four variables, namely: power distance, uncertainty avoidance, individualism- collectivism and masculinity-feminity. In 1985 Bond added a fifth dimension, long term versus short term orientation, or Confucianism dynamic. According to Hofstead(1983, 1985) of the above five dimensions, power distance and uncertainty avoidance are considered to be the most important in studying organizations in different national cultures. Hofstead’s model of national culture is based on work related values and is one of the most widely used models in cross-cultural management. In addition, Hofsted’s framework has been increasingly employed in information system research (Straub, 1994; Watson et al., 1994, Fleron, 1997).

In their research Robbins and Coultar(2002) also reported that individuals perceive the culture of the organization based upon what they see or hear within the organization. Though individuals may have different backgrounds or work experiences at different levels in the organization, but they tend to describe the organization culture in the similar terms. An organization’s culture usually reflects the vision and mission of the organization’s founders. The organizations may have strong or week culture, strong culture shares values which are intensely held and widely shared and have a greater influence on employees whereas in week culture it is not so. Therefore, introduction of any new technology in an organization may need different adoption strategies.

On the basis of above definitions, it can be concluded that there are many diverse views of culture because the writers come from different discipline with dissimilar orientation and background. So, it can be said that the personality of the organization is represented by its culture. A culture is a system of shared meaning within an organization that determines in large degree that how employees act. Shared values, norms and organizational practices do shape the culture that assist organizations to adopt the changes.

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There is also a substantial literature documenting the impact of culture on adoption of technology. For example Slowinkowski and Jarratt(1997) note that the effect of cultural factors, specifically ‘traditions’, ‘religion’ and ‘fatality’ have grater impact on adoption of technology and must be considered with great care in adoption process. Another study proposes that two cultural values are of specific relevance for the adoption of new technology i.e learning orientation, and openness to the adaptation of new technologies. The finding of that study suggests that a technological environment is not necessarily open for adoption of technological change, and that the learning orientation plays a critical role in the assimilation of new technology(Brainin and Erez, 2004).

Madon(1997) reported that technology particularly IT is not culturally neutral. Every technology depicts the culture of its manaufacturing country. Developing countries can not easly grasp the new technology as quickely as developed nation do. The reasons behind are logical that weightage is given to the values of workers in the developed world where rationalism and individualism are prevailing core concepts of culture. Developed worlds design the technology by keeping in view demands and aspirations of their culture. Developing countries find it difficult to cope with pace of changes generated by adoption of new technology.

Khalil and Elkordy(1997) pointed out in their study that the cultural sensitivities of host environments are often ignored in technology adoption decision. This is especially true in the work place since the adoption decision is often negotiated by upper-level managers who either work for international companies or who have spent time in the industrialized countries. Yet it is the lower level managers and workers who, without the diverse cultural experiences, have the responsibility of the daily use of the new technology, and ultimately accept or don’t accept it.

Culture impacts both how systems are designed and how they are received. As Hill et al.(2002) in their study of “Transfer of IT to the Arab world” found that successful transfer and adoption of IT into organizational/business workplaces in culturally and socially diverse countries require an understanding of micro-level beliefs, norms, and

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actions within the framework of national and international macrostructures. Culture is an independent variable that impacts IT and is reflected in formal and informal organizations/businesses. Culture gives people the sense of order they have to their every day lives. Cultural beliefs and values of different cultures differ markedly in term of how they construct a meaning for technology. Hill et al(2002) are in a openion that culture does not necessarily need to be viewed as a barrier that always obstructs technology. Indeed, culturally appropriate technology design and implementation, which considers the differential influence of culture on technology, can enhance its transfer and adoption.

Robey and Badreau(2000) report that that culture influence the outcome and the type of many managerial practices. They worked on a conceptual framework for understanding cultural constraints on technology transfer. Their model incorporates national cultural (Societal culture in their words) as a key moderating variable in studding IT transfer. According to them basic assumptions, norms and values influences a lot on IT success and IT has the power to eliminate temporal and geographical barriers.

Wettemann and Rabecca(2003) also effectively argue that people of different cultures communicate and collaborate in different ways. Americans, Japanese, Germans and French etc. all have different cultural styles. The management must see first that in what culture their organization is operating and then adopt any technology according to that culture. But Odedra(1996) looked it from different angle and say that IT doesn’t take ‘culture’ as obstacle in its adoption, rather it facilities culture and minimizes effect of cultural barrier because it allows for quick and vivid transmission of information between people and organizational subunits. He further adds that the motivational effects of culture that are supportive of efficiency and innovation can be enhanced with IT. Communicative IT such as email, voicemail and Intranets can help promote the cultural norms and make available supportive messages and statements to employees. This can also motivate the employees, resulting in increased efficiency and innovation. Sherer(2004) is also of the opinion that culture values not only have impact on IT adoption but it have impact on IT investment management process as well.

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Middleton(2000) in his research has also identified cultural factors as the most important determinant of IT adoption in the organization.

Another researcher Fleron(1997) argues that implementation of a new technology does not end with installation of the machinery and explanation of how to use it. As most of the technology is designed and produced in developed society with their cultural values in mind, it could be expected that there would be some social and cultural gap with less technologically developed societies. He suggests that transferring education, organization, administration, employment strategy, and research etc. could reduce this gap. It is normally expected that the new technology would be accepted by the receiving society. Therefore, the set of values introduced by and indispensable for the use of the new technology must not be contradictory to the values accepted for the receiving society(Madon and Shay, 1996).

If we view the Pakistani culture, It is a mix of religion, Indian origin, British inheritance and American influences(Khilji, 1999). These influences have greater impact on economic, legal, educational systems of the country and working patron of the employees in organizations. American result oriented and progressive management style, Britain slow and bureaucratic working, Islamic value system of collectivism and accountability management practices are the key ingredients of Pakistani culture(Ahmad, 1996). Therefore, these mix characteristics have the greater concern to the managers while deploying any new technology.

To conclude all above, it can be said that the culture, a borrowed concept from the discipline of anthropology, has been an important issue in management and international management in general, and in information systems in particular. It may affect the organizations in both ways for success or failure of adoption of any technology. Culture is very important factor that can significantly affect transfer and adoption of IT. Culture of any organization is a blood stream, running all directions, vertically and horizontally and maintaining its’ over all image. It also has an important impact on the information systems’ success of any company. The culture misfit is likely to occur if an information

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system or IT developed in one culture is implemented in the same way in an organization possessing a different culture. Culture basically establishes constraints on management as to “what-they-can-do and what-can-not”. If the culture is receptive to change, management may not feel any difficulty to implement its plans of adoption of new technologies but if it is not, the management faces difficulties and is forced to first make culture receptive to new change. This could be made possible through education, training, administration and research.

Culture is one of the major factors that influence organizational structure and management practices but it never creates barrier in the adoption of any innovation.Culture is a critical aspect of success for firms. If the culture is supportive, the work environment tends to me bore enjoyable, which boots moral and this leades to increased level of team work, information sharing, and openness to new ideas and plans. Organizational culture orientation programs to mold employee’s behavior can make culture more supportive in the way of implementation of any new technology. As different cultures may have different behaviors, attitudes, and beliefs, so is the case with Pakistani culture, which has greater influences of Islamic system, American influences, Britain inheritance and Indian origin. So it would be very right to say that a company who wants to standardize its system (the same system in all the units-local and abroad) to get economic benefits may face complexity due to cultural differences and need to overcome this problem by applying all means and ways as discussed above.

Human Factor 4.1.2 Szewczak and Snodgrass(2002) say that individuals play an effective and important role in technology adoption process. A technology is not successful if its user does not accept it and in case of IT it is also true. Lack of user acceptance to technology has long been an impediment to the success of new technologies. Therefore, its understanding has been a high priority item for researchers and practitioner alike(Chau & Hu, 2002; Venkatesh & Davis, 2000).

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Avergou(1996) says that user participation could be considered as “Taking part” in some activity. Such participation may be direct or indirect, formal or informal, performed alone or in a group, but covering varying scopes of activities during systems development and implementation. Lin and Shao(2000) in this regard argue that the participation of users in the design and implementation of projects promote greater user acceptance. In IT projects IT usage, system quality, organizational impact and increased user satisfaction, could lead to increased IT adoption success. Moorman et. al(1993) also add that the greater the user participation in the project is, the greater will be the establishment of trust in the success of the project as the users are the right persons who identify loopholes in the project before final implementation and will also feel committed to make it work.

Bowonder et. al(1999) have found that user participation facilitates organizational learning by bringing together all dispersed knowledge from the various units within the organization to one spot where employees can access information, learn from one another and benefit from new knowledge developed by other units. This all provides an opportunity for mutual learning and inter unit cooperation. It stimulates the creation of new knowledge and, at the same time, contributes to organizational abilities to innovate.

Walsham et. al.(1998) demonstrate that the goal of every organizational based information systems is to improve job performance and this performance efficiency is achieved when IT is accepted and used by the concern employees in an organization. Wettemann and Rabecca(2003) add their views to this discussion by saying that before undertaking an initiative for deploying technology, organizations should examine their corporate culture. It is likely that individuals working in that organizations will feel threatened by any project that pushes them back or to force them to change their working styles and patterns and these individuals would create problems in usage of that technology in future.

Mayer(2001) is of the view that technological replacement is not the ultimate challenge that managers face, rather motivating the humans is a bigger hurdle. Individuals working in the company if are cooperative can bring success or otherwise may do reverse of it.

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Mayer(2001) also identified that among all employees, comparably younger workers are more strongly influenced by attitude towards using the technology and open to the new technology. In contrast, older worker are more strongly influenced by objectivity and perceived behavioral control. He argues that this issue is very important and the organizations must consider it seriously.

Estrin et. al(2003) demonstrate that managers of many firms have a high-level understanding of their business and operational process but they often lack employees with the experience and skills necessary to adopt new technologies. Frenzel(1999) notes that scarcity of skilled employees and experienced managers limits the introduction of complex and rapidly evolving technology and shortages of highly skilled people somewhat limit effective implementation of information systems in business and industry. He emphasizes that the proper training of employees can sharpen skill to new technology. Mayer(2001) in a study conducted for United Nations’ project also concludes that it is becoming increasingly transparent that human skill shortage and changing skill requirements are the principal initial barriers to the introduction of new technologies like IT, in both the developed and developing countries. The majority of establishments he has surveyed in France, Germany, and U.K have rated ‘lack of expertise’ as the most important problem when introducing IT into products and processes.

Many other studies also revel that some managers are reluctant to use advance technology because they often view advanced technology as an expense rather than a strategic investment. They also have the fear that technology adoption can be a never- ending process-one that causes expenses to spiral out of control, so they start resisting its use as they feel that they can not afford advanced technologies(Landes, 1998; Estrin et. al., 2003). Estrin et al(2003) have also indicated that in an organization, owners, managers and employees have multiple responsibilities and performs multiple tasks, they are under tremendous pressure to be productive. So they feel that they don’t have time to experiment with new systems or to “wait” for a system to pay for it. Therefore, they avoid adopting new technologies and prefer to work with the old systems.

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Pakistan has abundance of expert human resource to work. Being the highly populated country with 2.1% rate of population growth, Pakistan has manpower in all fields. But with the great intervention from government side in organizations’ HR polices, the organizations however sometimes feel difficulties to hire talented peoples(Khilji, 2001). Many projects in Pakistan fail due to lack of expert personnel in their respective field and the same case is with IT projects.

In short, individuals being an integral part and most scarce resource of any organization are very important for success of a company. The individuals working in the corporations at different levels play an important role in acceptance or rejection of any new technology. Even though organizations may adopt the technology best fits to their business activities, but they can not guarantee performance leveraging unless the organizational members appropriately use it. So acquiring appropriate technology is necessary but not sufficient condition for utilizing it effectively. Therefore, individuals acceptance of technology and especially usage is an important issue.

The effective application and adoption of IT in the organization also requires competent staff and willing users, and this involves a substantial process of learning and knowledge sharing. A stable environment for learning and knowledge sharing is essential for cultivating the necessary pool of talent and also to instilling cooperation among users. The fullest user involvement in technology adoption decision is a success. Technology adoption by force may result in individual’s non-cooperation and eventually failure to adopt it. So, there is a dire need to involve all employees in technology adoption decisions by offering them all types of rewards. There is also a need to have competent and suitable personnel to work on different projects. The organization should also accommodate employees by all means, to make them relax and also introduce any new technology gradually by involving them all ways.

Social Factor 4.1.3. The social change works both ways: it become the reason for technological change and also play a role of a great barrier in any technology adoption decision. As this is an era of great technological changes, so every day companies come across with new

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product and services. Yet the habits, taste, customs, values and culture of any country or an organization do not allow them to go for the change. So organizations have to think otherwise, to defer or totally reject few new technology adoption decisions.

Many researchers have emphasized on the importance of social factors in deployment of technology. Godwin and Guimarases(1994) for example say that three factors are to be considered to see social involvement in technology advances i.e. 1) social need-to feel strong desire of some thing, 2) social resources-the capital, material, and skilled personnel vital for innovation and adoption of new thing, 3) sympathetic social ethos-an environment in which the dominant groups are prepared to consider innovation seriously and are receptive to new idea. According to Godwin and Guimarases(1994) in default of any of above factors it is unlikely that a technological innovation is widely adopted and is successful. Aanadarajan et. al(2000) have conducted a research in banking industry and identified social factor as the basic factor affecting IT usage. An other researcher named Delmar(1992) also has identified several other social and organizational factors which do affect the technology implementation and adoption success. According to him these factors are user perception of innovations’, firms’ culture, type of communication channels used to diffuse knowledge of the innovation and various leadership factors. They stressed on the need to fully understand these factors before adoption of any technology.

Amstrong(1999) also narrates that technologies such as IT, have probably the most important social impact, that is its impact on the labor market. There is no agreement about whether the number of jobs increases or decreases when IT is adopted, but there is a great deal of pessimism about it. Amstorng(1999) further says that it is clear that the characteristic of the workplace and the required qualification and skills are changing so new jobs require more qualified and skill personnels. This results in job re-training of old employee. Some those who do not change would disappear or would easily be replaced by someone more talented. So employees now a day are required to continuously update their skills and knowledge. Chepaitis(1998) in this context says that in developed countries, technology is often a cheaper alternative to personnel, so the question of

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introducing IT in countries where the unemployment rate is increasing each year becomes important to be considered before introducing IT.

Madon(1997) also has talked about the inadequacy of trained personnel as one of the most important problems of the developing countries. According to him, developing countries either do not have trained IT people or those who are available for them social environment prevailing in the country is not accepted, so they prefer to migrate to the advanced countries. The social set up in Pakistan generally incorporate ‘Islamic’ code of conduct, in which obedience, respect to elders, teachers, bosses etc is taught right from the childhood. This type of system of dependence pervades all human contact and people carry need for dependence/security (Lyon, 1993). So sometimes they just are forced to cooperate in implementation of any new project against their wishes, leaving a room for resistance afterward. This point is to be considered seriously by the policy makers.

To sum up, it can be said that social acceptance of a particular technology, is very vital. An acceptable social environment is needed to be created by the country or the organization to attract and retain talented peoples and to convince them to willingly accept new technology.

Organizational Structure Factor 4.1.4 Robbins and Coulter(2002) describe that the organizational structure is its framework, which is expressed by its degree of complexity, formalization, and centralization. An organization is divided into different divisions, departments, sections, teems and work groups for the purpose of smooth working and each member in the organization is given certain responsibility and authority to his position. So relationships among individuals, groups and all departments are established with a formal line of authority and organizational resources are deployed for business conduct. If there is any misfit among them then problems may arise and it would become difficult for the management to introduce any technology. Brainin and Eraz(2004) are of the views that mechanistic organizationas are bureaucratic, and rigid to adopt change. Whereas,organic organizations are highly adaptive to change as need arise. Therefore, the behaviors of

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organizations towards adoption of technology vary with their structure type. Organic structure is most appropriate for new technology as it is flexible and maximizes adaptability.

In early 1960s, a British scholar named Joan Woodward also demonstrated that organizations’ structure is a significant contributor to the technology adoption. She founded in her research that 1) distinct relationship existed between the technology and structure and 2) the effectiveness of the organization is related to the “fit” between technology and structure. Charles Perrow, her follower also derived from his research that control and coordination methods vary with technology type. According to him the more routine the technology is, the more highly structured the organization should be. Conversely, non-routine technologies require greater structural flexibility, and high level of interaction among members.

Hussain & Hussain(1993) narrates that Pakistani organizations have a formal and hierarchical structure, consequently polices are mostly centralized in head offices. Employees from different offices are forced to follow a policy of uniformity of objectives and culture. Hussain & Hussain(1993) further elaborates that there exists communication gap between management and employees and polices are made in isolation, feedback from employees is not sought. Employees seldom know what decisions are made at head office levels. Therefore, this type of struture creates many problems for deployment of any new technology.

So from the above discussion it is concluded that an organization structure is an important factor to be considered in technology adoption. An appropriate ‘structure-fit’ is necessary for adoption of technology. Moreover members’ interactions and cooperation at all levels, among all departments, among all groups and teams are also necessary for success of introduction of any new technology.

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Governmental And Political Factor 4.1.5 Ayeni(2004) says that technology acquisition raises a number of political questions. The first relates to the dependence of the receiving nations on the supplying nation and this technological dependence could become a political one. So it is the responsibility of a government to select carefully the country from where technology acquisition is made so that no political problems could arise in future. The second question relates to the possible transfer of political power from political elites to the technical specialists. This problem is more prominent in computer-based technologies because these technologies are directly related with retrieval and processing of data and information. The people at the management level are mainly from non technical backgrounds, as a result of which there is always a tension between these two groups. The third question concerns the selection of countries to which certain technology could be transferred. An other researcher named Bhatnagar(1992) pointed out that political competition among organizational groups for influence over the organizational polices, procedures, and resources. New technology like IT inevitably becomes bound up in organizational politics because it influences access to a key resource namely ‘information’. So IT can effect who does what to whom, when, where, and how in an organization. As IT systems change organizations’ structure, culture, politics, and work, so there is often considerable resistance to them when they are introduced and there is a need to reduce this resistance Bhatnagar and Odedra(1990).

Montealegre(1999) also notes that there are various interest groups in an organization, which form a hierarchy and have a considerable share of political power, few of them are very receptive to new technology and the other creates resistance. Therefore, new technology may have to face severe resistance and it is needed to reduce that resistance.

According to an early study of Han(1991) the role of government has been identified as very important component in technology adoption. Government policies about tax and tariff subsidies, other rules regulations, restrictions, incentives and support with regards to a particular technology play an important role in adoption or rejection of any technology. Bowonder, et. al.(1993) also points out that the general stability of the

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countries in which the organization operates and the specific attitude of the elected government officials towards adoption of certain technology plays a crucial role in technology adoption decisions. Most advance country like U.S, generally have stable political environment and the officials generally have positive attitude towards adoption of technology but even the U.S firms operating globally face difficulties due to certain restriction of local countries of their operation whose record for stability is quite erratic for example, Libya, Republic of South Africa, and Iran.

Information Technology Barriers in Developing Countries

Technology education and extension. -R&D institute: weak links to industry -University education: slow response -Private training institutes: Low standards -Technology support institution: poor delivery of standard, extension, and information

Physical infrastructure -Poor telecom: Infrastructure and services -Unreliable power supply

Capital markets and financial institution -Poor access to credit for SMEs, particularly software and service suppliers -Inadequate lending for intangible investments -No venture capital for technology start ups

Local supply capabilities and access to international know-how -Weak presence of IT multinationals -Poor access to worldwide technology networks -Information asymmetry between local users and multinational suppliers -Weak user-producer interactions -Underdeveloped local consulting industry

Domestic Demand for IT -The missing middle-size enterprises -Islands of sophisticated users. -Under-investment in domestic market development -Weak incentives for technology upgrading

Technical and managerial capabilities -Low information and computer literacy -Inappropriate managerial attitudes for information management -Institutional rigidities and constraints to learning

Underdeveloped public sector capability as information collector & IT user -Restrictive polices for public procurement and information sharing practices -Underdeveloped legal framework for information sharing and intellectual property rights -Lack of partnership between government and business -Weak civil service

Table 4.1: Source Hanna(1994). pp31

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Due to political restrictions and bans, the firms some time cannot develop or transfer new technologies and therefore, they have to rely on old methods and equipments(Straub et. al 1997). Pakistan also has a quite erratic political history. One researcher named Khan(1997) discusses that Pakistan’s political history has always symbolized a tug-of-war between the elite namely military bureaucracy and feudal politicians, all are attempting to monopolize power in all types of government.

This pattern has caused unrest as well as feels of insecurity and disillusionment for public. The continuity of polices is missing in government projects in all types of organizations such kind of practice in all types of organizations has caused failure of many projects.

To cut short all above discussions it can be said that political factor has the greater influence on the adoption of any new technology. Government policies, rules and the greater stability of the country play an important role in technology adoption. There is also dire need to overcome conflicts among all the groups in the organizations, to make them receptive to new technology.

Economic Factor 4.1.6 The economic issue also has great influence on the use of technology. Odedra & Madon (1998) state that two economic aspects of technology acquisition are important to be considered: i.e 1) funds for initial investment and 2) return on investment. In low and middle income countries, the funds available are often not sufficient to buy expensive technology. These countries mostly rely on the technology donated to them and later problems are encountered when the project is over. Lind(1999) has also identified that the lack of awareness of available technologies and its uses, capabilities, and return on investment are greater barrier to technology adoption.

The erratic political situation of Pakistan has lead to the economic hardships of the country. Every new government aims with to solve the same economic problems and then these

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very governments are duly changed with different projects unimplemented with resources underutilized(Khilji, 2001). Despite having such unstable economic systems, the organizations in Pakistan however are concerned sbout performance increase. Economic polices in Pakistan are made under influences of external pressure, therefore they do not carry consistency. The lacks of knowledge about technology selection, adoption, and implementation as well as lack of knowledge in organizational development and strategic planning restrict to the uses of new technology in organization.

Conclusions 4.2.0 The above literature review and discussion have pointed out that IT is an important tool for uplift of any organization and country today. An organization is surrounded by a whole range of culture, social, political, individual, technological etc. factors. These organizational and systemic factors alongwith other factors like coordination between different departments, proper infrastructure, top management support, and finances etc. can influence directly and indirectly on its way of act. The factors impact both ways i.e negative and positive. The size of these factors differs across countries and time, so the larger the negative impact of these factor is, greater the investment and an effort a firm have to make to adopt a more advance technology (Palvia et. al(1992)). These findings can be taken as guide line in a way that while deploying any technology in the organization the manager must first identify its potentials barriers and also the techniques which will be used to limit the negative impact of these barriers.

The factors which may impede/facilitate the adoption of new technology are needed to be scanned before implementing any new technology. Aligning these factors with new strategic technology adoption decisions is also a complex process which also requires a complete understanding of all the aspects. These factors may tend to create obstacles to prevent organizations from building capability and identifying role models to improve their performance or these factors could effectively work in a positive way that they facilitate the spread of technology. With regards to IT, it is a risky technology and “pattern of acquisition” of IT is also highly influenced by a complex and dynamic

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interaction of these social, political, economic, cultural, and organizational factors. So there is a need for multi-prospective consideration of management which should carefully cater all the aspects.

It is, therefore, rightly to say that there is no single best procedure for managing technology in all organization, since it depends on external social, economic, political and internal cultural factors and on skills, and they vary from country to country, organization to another, and region to region. There is a great need of proper management of technologies as per specific need, culture and environment of any organization and country. If a country or company tries to follow another country’s or company’s adoption model, it is not likely to work very well at all. Any particular technology is adopted according to its own environment, culture, conditions, need and requirements. Although barriers to take-up and spread of IT are similar for the use of each level of IT but there exist significant differences in emphasis of each. So the effective IT diffusion strategies are to be devised to develop organizational capabilities to use and diffuse it.

Similarly, in context of Pakistan, it is observed that IT holds a prominent position and is the way forward. The organizations have recognized significance role of IT and adapting it aggressively. However the prevailing political, economical, cultural, structural, and other conditions are not so supportive and needed to be made conducive for its proper deployment.

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Chapter

5 Reseacrh Model

General

5.1.0 The researchers have used several theoretical paradigms in examining the organizational performance impact of Information Technology. Several streams of research are concerned with assessing the organizational performance implication of IT and each bringing its own results. Manay theories have also been developed to address this phenomenon, but non of them has been conducted in Pakistan. All these researches have been conducted outside Pakistan, especially in advanced countries, in their particular cultural and environmental context. This research has developed a framework(model) Figure 5.1, in Pakistan context, which shows the relationship of Pakistani companies IT usage with organizational performance. It shows impact of IT investments, Impact of IT systems, impact of top management role, impact of training, impact of user involvement and impact of organizational and systemic factors on organizational performance.

The literature review, discussed in the previous chapters has identified that technology plays an important role in the growth of today’s organizations. Technology is a major source of change and it brings revolutions in the working of organizations. It is technology which has brought all major social changes in society. Over the time, technology is becoming cheaper and better at a rapid pace. The developing countries like Pakistan are highly dependant on the technology, which is developed in advanced countries.

In providing the background to the subject, there has also been discussion that IT is the key technology of today’s life and an important management tool. It affects a lot on the

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functioning of the organizations. IT is being used in all functional areas of the organizations to increase their performance and IT now is playing more important role in the organizations than what labor and capital play.

It has also been discussed that technology becomes useful when it is properly diffused and technology adoption is considered much important than the technology development. It is discussed that IT is an individual user based application and its adoption/diffusion process should also start at that level. It is found that a strong advocacy rather than dministrative force would be more effective to avoid a negative trend and resistance in the mind of user, for any new technology. It is established in the literature that over the

Organizational Factors: Culture, Structural Human Resource

Top Management & Companywide Support

Information Technology Uses of Systems Information Organizational Technology Performance

Information Technology Investments Training & User Involvement

Systemic Factors: Social. Government Economic, Political

Figure 5.1: Research Framework

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time the use of IT has increased rapidly in all the organizations of Pakistan. IT has been applied throughout all areas of both manufacturing and service industries as well and its role has grown and changed continuously in both the sectors. It has been noted that advances in IT hardware and software have provided many opportunities to the companies to utilize IT in their functional areas to increase their performance. The use of IT has improved many aspects of the organizations. If IT is implemented properly in the companies, it performs a range of activities with grater efficiency by taking less time, incurring a lower cost or acquiring fewer efforts.

It is also found, that successful IT introduction in the organizations has saved time and money, increased revenue and market share, interlinked several functions and units, and improved organizations’ performance by eliminating delay, administrative intermediaries and redundant processing steps and by providing better access to information, improved decision making etc. IT is used for organization reengineering, innovation, organization transformation and as a strategic weapon for social and economic changes. But all these IT benefits are dependent upon the ways the management deploy it in the organizations. An industry using IT has to consider that how much, when and where to make IT investments to get high performance. It also has to consider that what type of hardware, software, personnel and information systems would be more usefull. Proper training and involvement of the user in IT projects were also found to have greater impact on IT success to increase the management performance.

The importance of organizational and systemic factors like culture, government, individuals, social, political and economic factors which may affect the adoption of any technology is also discussed. It is observed that that these factors play an important role in adoption and success of any technology. The size of these factors differs across countries and organizations. A suitable culture, social acceptance by the employees, favoring governmental, political and economic conditions were found to be important factors for success of IT and failing to put their proper dimensions can inhibit the success and may increase cost and efferts and the risks of failure. The proper management of

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technology as per specific culture, political and social requirements of the organization, can make adoption of any technology a success.

Pakistani organizations serve as an excellent case for the study of an impact of IT on organizational performance. The government of Pakistan is fully supporting the introduction of IT in the country on priority basis. It is found in the literature that though Pakistan now has well established IT infrastructure with fully equipped telecommunication network but still there exist need for the government to enhance IT facilities. Moreover, less qualified IT personnel, data security, non availability of full fledge hardware industry, very high taxation on import of computers parts, still high cost of communication and Internet connectivity are seemed to be greater problems in the way of making country as an IT giant.

Proposition Derivation.

5.1.1 By synthesizing the literature review discussed in previous chapters and using the integrative model discussed above as a lens, we identified following research questions to organize the surveys and guide the direction of research. These questions are divided into two groups.

Group 1

Question 1: What impact IT investments have on use of IT, positive or negative in term of decrease/increase in income/profit and other performance indicators like customer satisfaction, stakeholder confidence, interoffice linkage, job interest of employees and company image.

Question 2: Management Performance of the IT based organizations is associated with the reasons that for what function/purpose IT is being used in the organizations, type of Hardware/Software is being used and what level of information systems an organization has attained so for. Question 3: What role management support, training and user involvement in IT projects of organization play for having best organizational performance?

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Group 2 Question 4: How and to what extent organiztional and systemic factors such as Culture, Social, Governmental, Political, Human, Organizational, Economic and other problems have impacted the usage of IT in the organization. Question 5: What measures organizations usually take to overcome IT adoption problems in Pakistan?. Question 6: What are the reasons for so far IT success in Pakistan?.

Conclusions

5.2.0 The first group questions discussed above concern to the points that how investments in IT are linked to high organizational performance, how organizational performance is bettered off through effective use of IT. The focus is also made to identify that what IT systems are most suited at present time to the success of any organization and what role management support, training and user involvements has, to uplift IT and use of IT sytems in the organizations. The second group of questions relate with systemic, organizational and other factors which may impede or facilitate the use of any technology in the organizations. The organizational measures to overcome technology implementation problems and reasons for IT success to make IT implementation successful also are concerns of questions in this group. The discussions made in the ensuing chapters present our research methodology, data analysis & interpretation, and findings drawn on our research questions alognwith our recommendations.

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Chapter

6 Reseacrh Methodology

General 6.1.0. The literature review, as discussed in the previous chapters has identified that technology plays an important role in the growth of today’s organizations. Technology is a major source of change and it brings revolutions in the working of organizations. Technology brought all great social changes in society. Technology is becoming cheaper and better at a rapid pace. Developing countries like Pakistan are highly dependant on the technology, which is developed in advanced countries. In providing the background to the subject, there has been discussion that the Information Technology is the key technology of today’s life and an important management tool. It affects a lot on the functioning of the organizations. IT is being used in all functional areas of the organizations to increase its performance and it is now playing more important role in the organizations than labor and capital.

It is established in the literature that over the time the use of IT has increased rapidly in all the organizations. IT has been applied throughout all areas of both manufacturing and service industries as well and its role has grown and changed continuously in both the sectors. It has been noted that advances in IT hardware and software have provided many opportunities to the companies to utilize IT in their functional areas to increase their performance. The use of IT has improved many aspects of the organizations. If IT is implemented properly in the companies, it will perform a range of activities with grater efficiency by taking less time, incurring a lower cost or acquiring fewer efforts.

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and redundant processing steps and by providing better access to information, improved decision making etc. IT is used for organization reengineering, innovation, organization transformation and as a strategic weapon for social and economic changes. All IT benefits are dependent upon the way the management deploy it in the organizations. An industry using IT will have to consider that how much, when and where to make IT investments to get high performance. They also have to consider that what type of hardware, software, personnel and information systems they are using. Proper training and involvement of the user in IT projects were also found to have greater impact on IT success to increase the management performance.

The factors like culture, government, individuals, social, political and economic conditions which may affect the adoption of any technology are also discussed. It is observed that these factors play an important role in the success of any technology and size of these barriers differs across countries and organizations. Longer the negative affect of these factors are, the greater the investments and efforts organization has to make to adopt and use IT. So, the proper management of technology as per specific culture, political, social requirement of the organization can make that technology more succesfull.

Pakistani organizations serve as an excellent case for the study of an impact of Information Technology on Management performance. The government of Pakistan is fully supporting the introduction of IT in the country and IT now is on its all priorities. It is found in the literature that Pakistan has now well established IT infrastructure with fully equipped telecommunication network but still there exist need for the government to enhance IT facilities. Moreoer, less qualified IT personnel, data security, non availability of full fledge hardware industry, very high taxation on import of computers parts, still high cost of communication and Internet connectivity seem to be some problems in the way of making country as an IT giant.

The researcher believes that no similar study has ever been undertaken in and outside Pakistan. Accordingly, further investigation into this particular area is required. This may

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be achieved by undertaking relevant fieldwork and making a detailed study of the firms that use IT.

Objectives of Research 6.2.0. The main focus of the research was to identify the relationship of IT with organizational performance (effiency and effectiveness) of Pakistani organizations in banking and manufacturing sectors. It also focused on the problems faced by different business firms in Pakistan using IT, in coping with the new developments in IT and in successful implementation of IT systems. The utmost desire of each and every company is to increase its performance by less cost and by applying all latest technologies, techniques and tools. But to achieve so, the organizations do face many problems in the way of adoption and implementation of any new technologies in their setup. These problems may arise as a result of deploying technologies without planning, incompetent human resources, poor management, lack of financial resources, culture, political, social, governmental and due to other socio cultural/organizational/systemeci factors. The other focus of this research was to identify these problems and limitations experienced by the firms operating in Pakistan’s banking and manufacturing sectors and measures to overcome these barriers. As the IT includes computer hardware, software, personnel, telecommunications and resources assigned to supporting IT. Investigations therefore were focused on examining such issues as which part of the IT and what IT mix is most important and suitable for organizations’ success and has the greater effect on increasing organizational and management efficiency.

The study also examined the importance of management support, training and user involvement in IT projects. The study investigated that how much consideration organizations give to training and user involvement to ensure success of their systems.

The study also highlighted the reasons for slow pace of IT implementation in Pakistani firms. It examined the investments of firms in IT and its comparable usefulness/ benefits. It also tried to identify different types of IT investments and areas in which these investments are being made. Lastly, the study identified present state of IT in Pakistan

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and the role/efforts of Pakistani government to boost up IT sector and its cheaper and quality availability to the organizations.

Collection of Information 6.3.0. There are two types of data, which is usually used in research viz. primary and secondary. The primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. The secondary data, on the other hand, are those which have already been collected by some one else and which have already been passed through the statistical process (Neuman, 2005). Secondary data is very helpful in order to grasp knowledge about topic of the research. It helps the researcher to know the topic in detail and helps the researcher to confine his study and also guides to the core issues that are researchable(Kothari, 2005). For this research both primary and secondary sources of data are used for collection of information.

Methods For Collection Of Data 6.4.0. The methods of collecting primary and secondary data differ since primary data are to be originally collected, while in case of secondary data the nature of data collection work is merely that of compilation. There are many methods of colleting the primary and secondary data for testing the research problems, which have been defined through the hypothesis. Each method of course has its utility as well as limitations.

Method to Collect Secondary Data 6.4.1. Secondary data for this research is obtained from the company’s records, articles, published reports and the documents of various agencies. Already published articles and journals actually provide information about the previous work done so far on the same topic or in the same field and were used for the literature review. For this purpose the sources are journals, books, newspapers, websites and research articles. Such kind of data provides a base and platform to develop the track for future work. This also provides wide approach to the subject and the researcher after going through the colletcted literature, develop a mindset and ample knowledge about the field and the topic studied.

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Already published data gives information about the extent of work done in a particular field and what future researches can be done to continue the work. As IT is relatively new filed in Pakistan so very little published information was available. However, the researcher used the following sources to collect secondary data;

1. Web site of Government of Pakistan 2. Web site of Ministry of Science & Technology 3. Web site of Ministry of Information Technology 4. Web site of IT Commission of Pakistan 5. Web site of State Bank of Pakistan 6. Web site of Computer Society of Pakistan 7. Web site of Punjab Information Technology Board 8. Web site of Pakistan Bureau of Statistic. 9. Library of Lahore University of Management Sciences 10. Library of Institute of Business Administration. Karachi 11. Library of Institute of Management Sciences, B.Z.University. 12. Library of State Bank of Pakistan Karachi. 13. Library of Bahauddin Zakariya University Multan. 14. Digital Library of Higher Education Commission Islamabad 15. Articles down loaded from Emerald-Libarary.com & Google.com 16. Articles published in different issues of Economist, Newsweek and Pakistan & Gulf Economist. 17. Articles published in daily news papers, the Dawn, The Nation, The Jang, The News, The Business Recorder and The Express 18. Articles published in different International Journals and World Bank jornals/publications. 19. Books published by different authors. 20. Library of COMSATS institute of Information Technology Lahore campus.

Data collected from these sources is compiled and produced in the form of literature review in this thesis and discussed in chapters 2-4. The pattern and format of review and research is based upon all that information that the researcher has gathered from the above mentioned sources. In the research, financial reports of all the organizations were also required to know about the IT investments over time and its contribution to firms’ performance in term of increased profits, market share etc. These reports and financial data of all the organization are obtained from following source; 1. Annuals reports of sample organization 2. Annual reports of State Bank of Pakistan

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Methods to Collect Primary Data

6.4.2. There are many methods to collect primary data i.e 1.Experimentation 2.Observation 3.Case study 4.Survey. Each method has its own merit and demerits. 1) Neuman(1999) indentified that experiment method is is widely used method in research because of its logical rigor and simplicity, consistency with positivist assumptions, and relatively low cost. Kothari(2005) noted that the experimentation method was borrowed by the social sciences from the natural sciences, and began in psychology, is the best method in eperiemntal research. But Somekh and Lewin(2005) noted that this method is good in experimentation research but in case the research is of the descriptive type then primary data can be obtained either through observation or through direct communication with the respondents in one for or another through personal interviews. So for the purpose of this research, experimentation is not possible due to descriptive nature of research. 2) The observation method is the most commonly used method especially in studies relating to the behavioral sciences. According to Neumen(2005), under the observation method, the information is sought by way of investigator’s own direct observation without asking from the respondent but it is expensive, having limited information and the researcher may have to wait till the relevant event or behavior occurs.

This method is particularly suitable in studies, which deals with subjects (i.e. respondents) who are not capable of giving verbal response of their feelings for one reasons or the other. Fink(2005) also observed that observation techniques are both underdeveloped and underutilized. This technique is found not applicable in this research as well because of the diversified nature of the problems being examined. 3) Case study method is another method of data collection. Reddy(2004) argues that under this method one case study is undertaken and efforts are made to make a comprehensive study of the problem as a whole or entirely, keeping in view unitary character of the subject. Reddy(2004) further adds that the case study method is a very popular form of qualitative analysis and involves a careful and complete observation of a social unit, be that unit a person, a family, an institution, a cultural group or even the entire community. It is a method of study in depth rather than breadth. It is an intensive investigation of the particular unit or more of such units under consideration. This method studies the social

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unit covering all factors. According to Burgess(2004) case study method is a technique by which individual factors whether it be an institution or just an episode in the life of an individual or a group is analyzed in its relationship to any other in the group. Lerry(2005) argued that a case study helps in maintaining unitary character of the subject. In respect of case study method an effort is made to know the mutual inter relationship of casual factors.

Hays(2000) pointed out the demerits of case study and says that 1) in case study it is difficult to extract information from the parties, particularly when the information called is of confidential nature or bring lurking fear of some disadvantage at some distant feature. 2) case study method is based on numerous assumptions, which may not be very realistic at time, and as such the usefulness of case data is always subject to doubt. 3) it consumes more time and need lot of expenditures. 4) the danger of false generalization is always there in view of the fact that no set rules are followed in collection of the information and only few units are studied. 5) case situations are seldom comparable and as such the information gathered in case study is often not comparable. Choudrie & Dwivedi(2005) reviewed different leading research journals from 1985 to 2003 and found that case study method is most widely used by the researchers when examining IT adoption/usage issues were at the organizational level and survey method was used predominantly when investigating the topics of user adoption/usage of technology. So this method is not used by this research because of its different nature to study the entire sample as a whole.

Suryey method is another method which is used for data collection. Tull & Hawkins(1988) say that this method provides both the qualitative and quantitative data required to meet the research objectives. Kinner and Taylet(1997) demonstrate that survey research is concerned with the administration of a questionnaire. It involves the systematic gathering of information from respondents for the purpose of understanding and/or predicting some aspect of the behavior of the population of interest. Kothari(2005) describes that surveys may either be through census or sample surveys. They may also be classified as a social survey, economic surveys or public opinions surveys. Whatever be

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their type, the method of data collection happens to be either observation, or interview or questionnaire/opinionnaire or some objective technique(s).

Zikmund(2000) demonstrates that surveys are usually appropriate in case of social and behavioral research because many types of behavior that interest the researcher can not be arranged in a realistic setting. The main constraints affecting this method are the extent to which respondents are willing and able to provide the desired data. In addition, an interviewee may be influenced by the interviewing process and accordingly provide distorted information (Kinner and Taylor, 1997). These constrains can, however, be minimized by carefully designing the research and data collection instrument and ensuring its proper implementation.

Survey through questionnaires method is quite popular, particularly in case of big enquires. It is being adopted by private individuals, research workers, private and public organizations and even by the governments. According to Baker(1999) “a questionnaire is a list of questions sent to a number of persons for them to answer”. It secures standardized results that can be tabulated and treated statistically. It consists of a number of questions printed or typed in a definite order on a form or set of forms.

Somekh and Lewin(2005) narrate that the questionnaires are of two forms i.e. 1) structured, in which there are definite, concrete and pre-determined questions. This form of question may be either closed i.e of the type ‘yes’ or ‘no’ or open i.e inviting free response but should be stated in advance and not constructed during questioning. The structured questionnaire may have fixed alternative questions in which response of the informants are limited to the structured alternatives. Thus the structured questionnaire is one in which all questions and answers are specified and comments in the respondents own words are held to the minimum 2) unstructured or non-structured questionnaire, in which the interviewer is provided with a general guide on the type of information to be obtained, but the exact question formulation is largely his own responsibility and the replies are to be taken down in the respondents’ own words to the extent possible, in some situation tape recorders may be used to achieve this goal. Somekh & Cathy(2005)

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demonstrate that structured questionnaires are simple to administrate and relatively inexpensive to analyze but have limitations too. But due to its advantages over unstructured questionnaire, these are used in most of the studies.

Leary(2005) says that there are four possible ways of administrating a questionnaire i.e 1.Mail 2. Telephone 3. Internet 4. Personal interview. 1) Questionnaire may be sent by mail (post) to the respondents who returns completed questionnaires to the researcher by the same method. The respondents read and understand the questions and write down the reply in the space meant for the purpose in the questionnaire itself. The respondents have to answer the questions on their own. The method of collecting data by mailing the questionnaires to respondents is most extensively employed in various economic and business surveys because of the merits that it is comparatively low cost, free from the bias of the interviewer, respondents have adequate time to give well thought out answers, unapproachable respondents can be contacted and large samples can be made use of and thus results can be made more dependable and reliable.

Despite merits, however, there are many demerits of this techniques i.e. low rate of return, can only be used only when the respondents are educated, ambitious replies, inflexible, difficult to know whether the replies are given by the actual respondents and it is the slowest among other methods(Tull & Hawkins, 1988). Though by conducting a pilot survey for testing the questionnaires however would have minimized these deficiencies but this method of survey was not found feasible for this research because of above stated demerits. 2) a telephonic interview can also be used to collect data. It plays an important part in the industrial surveys particularly in developed regions because of high rate of response, no requirement of field staff, more flexible then mailing method, faster then other methods, quick way of obtaining information, replies can be recorded without causing embarrassment to respondents, while instant data analysis is possible by means of computer aided telephone interviewing and this method may be more economical as compared with personal interviewing Miller and Whichker(1999). This method was used for follow up for getting financial data from some companies. 3) an Internet can be used as an advanced technique for collecting data, whereby the

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interviewer intaracts the respondent through a computer by an instant messenger or mail. This technique was also not used, as it again needed a continuous contact with the respondent with no break in conversation, which was difficult. Moreover, it was not sure that the contact is being made with the actual respondent or not. If the questionnaire would have been sent through e-mail it might again taken long time to receive reply and would have encounterd all other same difficulties as mentioned above in ‘mail’ problems.

Another method available for the collection of primary data is the personal interview method. Hays(2000) says that an Interview can be classified into two types one is non- directive also called uncontrolled, unguided and unstructured interview. In this type of interview, the interviewer does not follow any list of predetermined questions. Interviewer allows the interviewee to narrate his own experiences in the manner he will like to. He is also permitted to give his own definition of a particular social situation and also importance of events from his viewpoint. The second type is the directive interview. In this method of interview, there are predetermined questions, which the interviewer is required to put on the interviewee to collect information of his purpose. All respondents in this are required to reply to the same questions, but each one has his own meanings to the questions and replies accordingly. In this alternative answers can also be provided with the result that all these questions can be only closed questions. But some questions can also be open ended as well and as such the interviewee might like to reply the way he likes to reply. In case the reply given by the respondent is either not satisfactory or not to the point the question can be repeated(Hays, 2000).

In social research interview method is becoming increasingly popular. According to Tull and Hawkins(2003) personal interviewing is the best technique when the interview is likely to be fairly complicated and the period involved is lengthy. This technique is widely used in research. Willing(2004) narrates that in this method the interviewer himself approaches the investigator, puts questions to him and himself records the replies usually not bringing to the notice of the respondents. In this system there is a direct contact between the respondent and the informant. There are different methods of interview and the system has its own advantages and as well as limitations.

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In personal interviewing, the interviewer submits questions to the respondent in a face-to- face situation. Questions can be explained to the respondents and the interviewer can judge whether or not the respondent fully understands the questions. Moreover, the level of response is also higher, as in face-to-face situation it is not possible to refuse a request for an interview. Therefore, more information in greater depth can be obtained. Kothari(2005) says that interview method is the best method because of its flexibility in getting more information, securing the most spontaneous reactions and collecting supplementary information about the respondents and the problems.

In order to collect the primary data, survey based structured questionnaire, are undertaken within the organizations. As discussed above since in this type of questionnaire, questions and response categories are straight forward, respondents find it easier and convenient to answer the questions. Data analysis is easy and fast as the answers are more or less standardized. It is, however, not unusual, as stated by Parasuraman(1986), for a structured questionnaire to include a few open ended questions to allow the respondent an opportunity to comment more fully on some important issues., with special reference to the area identified in the literature review and keeping in view of the merits of personal interview. For the purpose of this research keeping in view of the benefits, despite some limitations, the survey through questionnaire methods with a structured close ended questionnaire in personal interview method was considered to be the most appropriate for fulfilling the objectives of this study and therefore was used by the researcher for this research.

Data Limitation 6.5.0. In this research, the research problems have been analyzed for the last decade i.e. from 1994 to 2004, because of the reasons that many companies operating in Pakistan were either not using IT before 1994 or IT had very little introduction and computers were being used merely as a word processing tools. So it was difficult to measure any of significant IT impact on management performance before above mentioned period. There were six hypotheses set for this study based upon research questions. Data needed for six

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hypotheses was requiring descriptive answers or ‘tick mark’ on an apporopirate reply. The researcher, therefore, did not find any problem in getting the required information, as the respondents were personally interviewd and were explained of questionnnairs.

However, the researcher did find great difficulties in obtaining the replies for financial data i.e income/IT expense data, which was required for first hypothesis. Among others, one of the major objectives of this research was to analyze Income vs. IT expenses since year 1990 to year 2004, to know about impact of IT on performance of organizations in term of increase/decrease in income and no of employees. So to perform this analysis it was manadatory required to have income and IT expenses data of the sample companies for the years 1990-2004. But, it has become very difficult to find out such data particularly IT expenses for that period, for all the companies in sample. As neither this data, particularly IT expenses were reported in any separate head of accounts in the annual reports of these companies, nor was the management of these companies willing to provide this information on various grounds.

As this data was considered very important for this research, so the researcher has tried his level best from all corners/sources to approach the management of these companies for this data but in vain. At last the researcher managed to approach by some sources to the Managing Director State Bank of Pakistan (Central Bank of Pakistan) and a Director, Security and Exchange Commission of Pakistan (SECP) and requested them to ask these companies to provide them this data, which will later be used by the researchers. On researcher’s request the SBP and SEAP managements were kind enough to officially ask these companies to provide them this data directly for their own use. Despite SBP & SECP efferts and directives even then most of the companies again declined to provide such old data citing confidentiality and busy schedules as reasons. However, by this way the researcher managed to collect some data through SBP & SECP in one year period from some companies. Therefore, Income & IT expense analysis for test of first hypothesis of this research is limited to those companies and for those years for which the data is received. So, for analysis of Income Vs IT expense, the companies are therefore divided into two groups as given in Table 6.1 & 6.2 given below. The response rate for

170

financial data was 42% for the year 1990-2004 and 67% for the year 1999-2004. For rest of the questions/data the response rate was almost 100%.

Sample Size 6.6.0 There are two population groups for this research. One is the banking sector local and multinational and the other is large manufacturing organizations again both local and multinationals, which are making use of IT. The reasons to select the above-mentioned sectors are that; 1) the banking sector of Pakistan is the most organized sector of the service industry and highly IT user 2) this sector has made much more investments in IT than any other sectors to achieve high performance 3) IT has met greater introduction in banking sectors for performance improvements since 1992 because of throat cut competition due to establishment of many new banks in the private sector or due to privatization of many nationalized banks.

The second sector of study i.e manufacturing is the next best user of IT. A large number of local and foreign manufacturing companies are working in Pakistan and are using IT for their business processes since long. Many companies in both the sectors have state-of- the-art technologies for improving their performance. The management of these organizations has also made numerous investments in IT with the hope to increase their efficiency. Keeping in view of the above reasons the researcher believed that a fine study would have been undertaken and selecting the aforementioned sectors as research study could make the best conclusions of the research. In the sample from the above sectors a total of 48 companies (24 locals and 24 foreign) are selected both from banking and manufacturing sectors which have started business in Pakistan before 1992. List of sample companies is given in Table 6.3 and 6.4. There are about 40 commercial banks operating in Pakistan(SBP, 2005). Out of these 40 banks, 24 banks are included in the sample because of the reasons that many other banks are either set up in few years back or do not have well established network in Pakistan, therefore, they do not serve the purpose of this research.There is no definite information available relating to the size of large manufacturing sector. According to an estimate about 3000 large-scale manufacturing units are operating in Pakistan(Saeed, 2003). Therefore, in the sample, from the manufacturing sector, a total of 24 large size well reputed organizations are

171

included. These companies have been established before 1992 and having well established set up in Pakistan. The sample size could have been increased but the nature of problem seems to be similar in each case. So the chosen sample size is considered to be sufficient. The companies selected are those using latest Information Technology and have also well established IT set up.

The participants in the study were categorized as follows; the staff and senior managers of finance, human resources, marketing and IT departments of the companies in sample. Two persons from each department were interviewed so eight respondents from each company. The responses of all eight respondents of each company were compiled together and a single/one reply of each company for all the questions is derived. So in total there were 48 replies in total for all 48 companies for all questions. Most of the data were captured through personal directive interviews using a structured close-ended questionnaire.

Table 6.1: Group 1: (Companies for which data was available for year 1990 to 2004

A. Foreign Banks B. Local Banks 1. ABN Amro 1. Allied Bank Ltd. 2. Bank Of Tokyo 2. Bank Of Punjab 3. Deutsche Bank 3. First Women Bank Ltd. 4. HSBC Bank 4. Muslim Commercial Bank Ltd. 5. HBL AZ-Zurich 5. National Bank Ltd.

C. Foreign Manufacturing D. Local Manufacturing 1. I.C.I Pakistan Ltd. 1. Atlas Honda Ltd. 2. Pakistan Tobacco Ltd. 2. D.G. Cement 3. Suzuki Pakistan Ltd. 3. Lakson Tobacco 4. Simens Pakistan Ltd. 4. Service Industries 5. Uni Lever Pakistan Ltd. 5. Packages Ltd

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Table 6.2: Group 2: In this group three more companies in each sector of group 1 are added and the data is available for the years 1999-2004. A. Foreign Banks B. Local Banks 1. ABN Amro 1. Allied Bank Ltd. 2. Bank Of Tokyo 2. Bank Of Punjab 3. Deutsche Bank 3. First Women Bank Ltd. 4. HSBC Bank Ltd. 4. Muslim Commercial Bank Ltd. 5. HBL AZ-Zurich 5. National Bank Ltd. 6. Citi Bank 6. Askari Bank Ltd. 7. Standard Chartered Bank 7. Bank Al-Habib Ltd. 8. Oman Bank Ltd. 8. Metropolitan Bank Ltd. C. Foreign Manufacturing D. Local Manufacturing 1. I.C.I Pakistan Ltd. 1. Atlas Honda Ltd. 2. Pakistan Tobacco Ltd. 2. D.G. Cement 3. Suzuki Pakistan Ltd 3. Lakson Tobacco 4. Simens Pakistan Ltd. 4. Service Industries 5. Uni Lever Pakistan Ltd. 5. Packages Ltd 6. Bata Pakistan Limited 6. General Tyre Ltd 7. L.G Pakistan Limited 7. Indus Mtors Ltd 8. Reckitt Benkiser Limited 8. Honda Atlas Ltd

List Of Companies In Sample The list of companies surveyed for this study is given as under. Table 6.3: Banking Sector List Of Local Banks List Of Foreign Banks 1 Habib Bank Ltd. 1 American Express Bank Ltd. 2 National Bank Ltd. 2 Citibank N.A. 3 United Bank Ltd. 3 Habib Bank AG Zurich 4 Muslim Commercial Bank Ltd 4 Algemene Bank Netherland (ABN Amro) 5 Bank Al Habib Ltd 5 Internaional Islamic Bank 6 Metropolitan Bank Ltd. 6 Deutsche Bank A.G. 7 Bank Of Punjab 7 Rupali Bank Ltd. 8 Askari Commercial Bank Ltd. 8 Standarad Charterd Bank 9 Bank Alflah Ltd. 9 Oman International Bank Ltd. 10 Allied Bank Ltd. 10 Bank Of Tokyo Ltd. 11 Faisal Bank Ltd. 11 Mashraq Bank Ltd. 12 First Women Bank Ltd. 12 Hong Kong & Shangai Bank Ltd.

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Table 6.4: Manufacturing Sector List Of Pakistani Manufacturing List of Foreign Manufacturing Companies Companies. 1 Packages Ltd 1 Uni Lever Pakistan Ltd. 2 General Tyres Ltd. 2 Reckett Benkiser Pakistan Ltd 3 D.G. Khan Cement Ltd 3 Procter & Gamel Pakistan Ltd. 4 Atlas Honda Cars Ltd. 4 Philips Electrical Company Ltd. 5 Pakistan Steel Ltd. 5 Siemens Pakistan Ltd. 6 P.E.C.O Ltd. 6 I.C.I Pakistan Ltd. 7 Lakson Tobacco Ltd. 7 Nestle Pakistan Ltd. 8 Indus Motor Ltd. 8 Colgate Pakistan Ltd. 9 Service Industries Ltd 9 Pakistan Tobacco Ltd. 10 P.E.L Ltd. 10 Suzuki Pakistan Ltd. 11 Dawllance Pakistan Ltd 11 Bata Pakistan Ltd. 12 Honda Atlas Ltd. 12 L.G Pakistan Ltd.

174

References:

Baker, T.L(1999), “Doing Social Research”, Mc Graw-Hill Companies, pp 30-74.

Choudrie J. & Dwivedi Y.K(2005), “Investigating the Research Approaches for Examining Technology Adoption Issues”, Journal of Research Practice, Vol 1, issue 1, 2005.

Fink Arlene(2005), “Conducting Research Literature Review”, 2nd edition, Sage Publications, Inc., U.K. pp51-148.

Goodwin, J.C(1995), “Research in Psychology: Methods and Design”, John W. & Sons.

Hays, N(2000), “Doing Psychological Research: Gathering And Analyzing Data”, Philadelphia: Open University Press.

Kinnear, T.C and Tylor, J.R(1997) “Marketing Research: An Applied Approach”, 3rd Edition. New York, McGraw Hill.

Kothari C.R(2005), “Research methodology-Methods & Techniques”, 2nd Edition, New Age International Ltd. Publisher, New Dehli, India. pp1-23, 34-35,95-121.

Leary Zina O’(2005), “The Essential Guide to doing research”, Pak book Corporation, Lahore, Pakistan. pp85-100, 150-183.

Miller, G.J & Whichker, M.L(1999), “Handbook of Research Methods in Public Administration”, Marcell Dakker, Inc. pp 181-203.

Neuman W. Lawrence(1999), “Social Research Methods, Qualitative and Quantitative Approaches”, 3rd edition., U.S.A. Allyn & Bacon Publisher.

Parasuraman, A(1986), “Marketing Research”, Mass.,Addison-Wesley.

Reddy R, Jayaprakash(2004), “Research Methodology”, A. P.H Publishing Corporation New Dehli, India.pp 11-16.

Saeed, Khawaja Amjad(2003), “Economy Of Pakistan”, Ibne Hasan Printing Press Karachi. pp 71-72.

Somekh Bridget & Lewin Cathy(2005), “Research Methods in the Social Sciences”, Vistaar Publications, New Dehli, India. pp197-236.

Tull, Donald S and Hawkins, Del I.(1988), “Marketing Research”, Macmillan, NY.

Willing, C(2001) “Introducing Qualitative Research in Psychology: Adventures in Theory and Methods”, Philadelphia: Open University Press.

Zikmund, W.G(2000) “Exploring Marketing Research”, 7th edition, U.S.A, Thomson Learning.

175 Chapter

7 Data Analysis And Interpretation

General

7.1.0 This chapter presents the analysis and interpretation of the data collected for this study. Quantitative and qualitative data were collected from in-depth interviews and official documents, detailing different aspects pertaining to the study. A series of hypotheses were formulated to test different issues as discussed in previous chapter, relating to IT investment impact on organizational performance, IT adoption problems, impact of socio- culture/organizational/systemic variable on IT usage and different organizational measures to overcome these problems.

Data Analysis Methods:

7.2.0 The general purpose of hypothesis testing is to determine whether the sample data support or refute a hypothesis about the population. The hypothesis testing is a statistical procedure that allows researchers to use sample data to draw inferences about the population of interest. To test all hypotheses of this study, analyses were carried out by statistical and financial techniques. The statistical software packages named SPSS 12.0 and Minitab 14.0 have been used for analysis. According to the problem/requirement, statistical techniques such as Linear Regression Model, One Way ANOVA, t-Test, z-Test, Cross Tabulation and Chi-Square test etc. have been applied. The statistical/financial technique used for each hypothesis is discussed with the respective hypothesis discussions.

The rationale to use these methods is that 1) the regression technique is best fitted for finding straight line for a set of data over a time scale (Gravetter and Wallnau, 2000). 2) Analysis of variance (ANOVA) is a hypothesis testing procedure that is used to evaluate mean differences between two or more treatments (or populations). As with all inferential procedures, ANOVA uses sample data as the basis for drawing general conclusions about populations(Fink, 2005). 3)

176 The t-Test/z-Test is the most elementary method for testing a hypothesis about a population mean or for comparing two groups’ mean score. It assumes that the variables in the populations from which the sample is drawn are normally distributed, and also that the populations have homogeneity and that they deviate equally from the mean(Kothari, 2004; Zikmund, 2000).

It may appear that ANOVA and t-Test are simply two different ways of doing exactly the same job: testing for mean differences. In some respect, this is true, however, ANOVA has a tremendous advantage over t-Test that it can be used to compare two or more treatments(Neuman, 1999). 4) The chi-square test for goodness of fit uses sample data to test hypotheses about the shape or proportions of a population distribution. The test determine how well the obtained sample proportions fit the population proportions specified by the null hypothesis(Willing, 2001; Reddy, 2004). In some hypotheses the analysis was performed using chi-square test. This was done as a measure of test of no association between two attributes. Scheffe test has also further been applied in certain cases for pair-wise comparison when the null hypothesis in ANOVA was rejected of different sectors. As being independent of each other, different hypotheses of this study have used any one or more out of above mentioned techniques/methods as per requirement. The SPSS and Minitab results included computing relevant test statistic such as regression coefficient(β coefficient), t-test statistic (or F-test statistic), degree of freedom (df) and the p-value.

The following discussion presents the analyses/results of different hypotheses of the study with conclusion of every hypothesis at the end of each section. The overall conclusion of the chapter is given at the end. In each of the following sections, the research hypotheses have been stated at the beginning. The research hypothesis is then taken as alternative hypothesis in the statement of statistical hypothesis.

Hypothesis 1 7.3.0 Research Hypothesis No 1: “ IT investments have impact on the performance of an organization”. This can be translated in form of statistical hypotheses as:

H0: IT investments have no impacts on performance of the organizations.

177 H1: IT investments have impacts on performance of the organizations. In order to test the above hypothesis, the performance of an organization has been measured in two ways: 1) In quantitative/financial terms: The above mentioned hypothesis has been tested by measuring: (a) Increase/decrease in net income, after usage of IT. (b) Increase/decrease in the proportion of employees as the IT is used. Time series data was available about both these variables. Simple linear regression model was fitted taking IT expenses as independent and income as dependant variables. Summary of regression results are presented in Tables 7.1(a,b,c,d) to 7.2(a,b,c,d) and 7.3. 2) Assessing the performance indicators: by assessing the impacts of IT on other performance indicators i.e customer satisfaction, stake holder confidence, customer/ supplier links, company image, job interest of employees and on inter office/links communications.

In the discussion presented herein we examined the impact of IT on management performance by performing the quantitative analysis of net income, IT expenses, total and IT employees. In interpretation, results of each company are discussed separately then comparison has been made between the Local & Foreign Banks, Local and Foreign Manufacturing Companies, Banking and Manufacturing Sectors. The discussion is also made on all the companies overall. The details of net income, IT expenses, total and IT employees of all the organizations are given in Annexure- XXIII.

1) Quantitative Analysis.

i) Banking Sector.

a) Foreign Banks: The regression analysis shows that IT has no impact on the incomes of the Bank of Tokyo, Deutsche Bank and HSBC bank as p-values or marginal significance levels for these banks are above 0.05. IT has positive impact on the incomes of ABN Amro and Habib Bank AG Zurich as p-values or marginal significance levels for both these banks are far below 0.05. All regression coefficients are positive showing that with the increase in

178 expenditure on IT, the incomes of these banks have substantially increased. Analysis is also made for all foreign banks as a whole for group 1 and group 2(Tabel 6.3 & 6.4). For both groups, it was found that IT has significant impact on income of all foreign banks operating in Pakistan (p-value < 0.05).

Regression Results Summary (α = 0.05) For Banking Sector Table 7.1(a) Year 1990-2004 Income = a+b(IT expense) Results S/No Bank Name β coefficient t-Statistics p-value 1 All Banks : n=10 7.179 8.661 .000 2 All Foreign Banks: n=5 4.458 10.573 .000 3 All Local Banks: n=5 7.726 5.929 .000 4 ABN Amro 7.487 15.187 .000 5 HBL AG Zurich 12.919 9.829 .000 6 Bank of Punjab 3.214 2.574 .023 7 First Women Bank 8.264 3.673 .003 8 Muslim Commercial Bank 10.791 8.871 .000 9 National Bank of Pakistan 7.316 2.510 .026

Regression Results Summary (α = 0.05) For Manufacturing Sector Table 7.1(b) Year 1990-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Companies: n=20 4.357 4.357 .000 2 All Local Manufacturing: n=5 4.148 3.071 .003 3 Atlas Honda 12.157 2.686 .019 4 Lakson Tobacco 12.509 7.885 .000 5 Suzuki 61.397 4.898 .000 6 P.T.C 1.956 2.182 .048 7 Siemens 1.624 5.927 .000

Regression Results Summary (α = 0.05) For All Companies Table 7.1(c) Year 1999-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Companies: n=20 0.02.798 2.685 .008 2 All Banking Sector: n=10 0.04.57 6.159 .000 3 All Local Banks: n=5 0.03923 4.432 .000 4 All Foreign Banks 0.155 9.453 .000

Regression Results Summary (α = 0.05) For All Companies Table 7.1(d) Year 1999-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Companies n=32 0.03496 4.258 .000

179 2 All Banking Sector n=16 0.04879 7.903 .000 3 All Local Banks n=8 0.04024 4.953 .000 4 All Foreign Banks n=8 0.09181 10.714 .000 5 All Local Manufacturing n=8 0.03068 2.680 .010

Regression Results Summary (α = 0.05) For Banking Sector Table 7.2(a) Year 1990-2004 Income = a+b(IT expense) Results S/No Bank Name β coefficient t-Statistics p-value 5 Bank of Tokyo 15.788 2.128 .053 6 Deutsche Bank -.466 -.172 .866 7 HSBC 11.273 1.405 .184 9 Allied Bank Limited .288 .047 .963

Regression Results Summary (α = 0.05) For Manufacturing Sector Table 7.2(b) Year 1990-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Manufacturing Companies: n=10 .118 .285 .776 2 All Foreign Manufacturing: n=5 -.275 -.423 .674 3 D.G. Cement 1.171 .374 .715 4 Packages 70.706 1.869 .084 5 Service -.701 -.112 .913 6 I.C.I Pakistan .496 .226 .824 7 Uniliver Pakistan -.960 -.761 .460

Regression Results Summary (α = 0.05) For all Companies Table 7.2(c) Year 1999-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Manufacturing Sector: n=5 -0.0153 -.648 .519 2 All Local Manufacturing: n=5 0.01588 1.165 .254 3 All Foreign Manufacturing n=5 -0.03544 -1.210 .236

Regression Result s Summary (α = 0.05) For all Companies Table 7.2(d) Year 1999-2004 Income = a+b(IT expense) Results S/No Company Name β coefficient t-Statistics p-value 1 All Foreign Manufacturing n=8 -0.005.53 -.203 .840 2 All Manufacturing n=16 0.001141 .073 .942

Regression Results Summary For Total and IT Employees (n=20) Table 7.3 Year 1990-2004 :IT employee % of the total employee = a+b(time) Results S/No Organizations t-Statistics P-value 1 All Companies 20.886 .000

180 2 All Banks 13.576 .000 3 All Foreign Banks -1.288 .220 4 All Local Banks 13.953 .000 5 All Manufacturing 16.565 .000 6 All Local Manufacturing 12.428 .000 7 All Foreign Manufacturing 17.500 .000 Years: Independent variable IT Employees %age to Total Employees: Dependent variable

As depicted in graph in Annexure II, total no of employees in foreign banks have been increased continuously from the year 1990 to 2004, despite of the facts that IT has been applied in all operations of the banks. The IT has not reduced the number of employees as anticipated by some circles due the reasons that most of the banks in this sector have introduced new products or services during this period, so the work load has increased, therefore, staff strength has also increased. It has also been observed that there are floating trends in the strength of IT employees. As graph in Annexure I indicates that IT employees have increased for years 1990-1993, decreased from 1994 to 1997 but again increased from 1998 onwards and that increase is due to increase in IT activities because of raised volume of transactions, introduction of new products/services and increasing competition with the local banks in offering online/ computerized services. The net income for these banks for the years 1990-2004 is PKR 11.429 billions and IT expenses are PKR 1.716 billions which comes to 15.02% of net income but net income for these banks for the years 1999-2004 comes to PKR 18.616 billions and IT expense are PKR 2.460 billions which are 13.21% of net income.

b. Local Banks: It is revealed from regression analysis that IT has impact on the income of most of the local banks i.e. Bank of Punjab, First Woman Bank, Muslim Commercial Bank and National Bank of Pakistan (p-vale or marginal significance level is far below 0.05) Table 7.1(a). But IT has no impact on income of one bank, i.e Allied Bank (p-value > 0.05). Overall it is also found that IT has positive impact on income of all the local banks for group 1 and 2 as for both groups (p-value <0.05).All regression coefficients are also positive which shows that with the increase in expenditure on IT, the incomes of these banks have increased significantly. Table 7.1(a)

As shown in graph in Annexure IV, there has been decrease in total no of employees of local banks. It is not because of IT but it is due to restructuring and privatization of most of local

181 banks. For right sizing purpose many employees were laid off by offering ‘golden hand shakes’ schemes. Contrary, as also presented in Annexure III, there has been gradual increase in the IT employees, due to increase in workload for up gradation, computerization/making online of many branches as per industry or customer need. Moreover, net income for these banks for the years 1990-2004 is PKR 28.040billions and IT expense are 4.186 billions with a ratio of 14.93%, whereas net income for these banks for the years 1999-2004 is PKR 28.710 billions and IT expenses are 4.479billions with an increased ratio of 15.60%.

c. All Banks : Turning to the overall performance of all the banks for group 1 & 2, it is observed that IT expenditure has impact on the income of all these banks (p-values< 0.05). A positive regression coefficient supplements our results that increase in expenditure on IT significantly increases the incomes of these banks.

To further examine the performance, trend analysis for IT spending and net income is carried out. It is noted that there is increase in income with proportional increase in IT expenditure of all banks. Detailing it, the net income for all the banks for the years 1990-2004 is PKR 39.470 billions, IT expenses are 5.902billions, which are 14.95% of net income. The net income for all the banks for the years 1999-2004 for group 2 is PKR 47.327 billions and IT expenses are 6.939 billions, which are 14.66% of net income. While the net income for all foreign banks for the year 1999-2004 is PKR 7.44billions and IT expenses are 1.050billions which are 14.12% of the net income for the same period, but these expenses are 61.20% of total IT expenditure out of the year 1990-2004. That means that the companies have been spending large amounts during the last six years in their IT operations. The same case is for all local banks i.e. the net income for all local banks for the year 1999-2004 is PKR 18.773 billions and IT expenses are 3.454billions which are 18.40% of the net income for the same period but these are 82.53% of total IT expenditure from the year 1990-2004. That also shows that there are high increasing trends in IT expenditures in local banks in the past six years (1999-2004). Surprisingly, the same results are found for the entire banking sector i.e. the net income for all the banks for the year 1999-2004 is PKR 26.213 billions and IT expenses are 4.505 billions which are 17.19% of the net income for the same period but

182 these expenses are 76.33% of total IT expenditure for the year 1990-2004. It indicates that there is high increase in IT expenditures in the entire banking sector during the years 1999- 2004.

To investigate the linkage between the IT expenditure and increase/decrease in number of total and IT employees, we observed that during the sample period, the number of IT employees have increased in the banking sector but total employees have been decreased Annexure XI & X. Further, our regression analysis also shows (Table 7.3) that this increase has positive impacts on income (p-value < 0.05). Table 7.4(a,b,c) and Figures 7.1 to 7.3 report the summary of net income/ IT expenses and % increase/decrease of income to expenses. Income & IT Expense Comparison for All companies for the year 1990-2004 Table 7.4 (a) For Group 1 : n=20 Expenses %of Sector Net Income IT Expenses income Foreign Banks 11,429,932,000 1,715,997,260 15.02 Local Banks 28,040,686,000 4,185,681,800 14.93 Total Banking Sector 39,470,618,000 5,902,679,060 14.95 Local Manufacturing 14,118,508,000 1,374,077,480 9.73 Foreign Manufacturing 22,371,542,000 10,453,731,000 46.73 Total Manufacturing Sector 36,490,050,000 11,827,808,480 32.41 Total All Companies 75,960,668,000 17,730,487,540 23.34

Figure 7.1

e Comparison of Income & IT Expenses for Comapanies for the year 1990-2004 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Expense of % Incom Local Tatal Sector Total All Sector Foreign Companies Local Banks Foreign Banks Foreign Banking Tatal Manufacturing Manufacturing Manufacturing Series1 Series2

Series 1 Show the Income Series 2 Show the Expense % of Income

Income & IT expense Comparison for all companies for the year 1999-2004 Table 7.4 (b) For Group 1 : n=20 %age of 1999-2004 expenses Sector Net Income IT Expenses Expenses %of income to 1990-2004 Expenses Foreign Banks 7,440,175,000 1,050,855,000 14.12 61.2 Local Banks 18,773,824,000 3,454,532,500 18.4 82.53 Total Banking Sector 26,213,999,000 4,505,387,500 17.19 76.33 Local Manufacturing 9,791,169,000 950,434,480 9.71 69.17

183 Foreign Manufacturing 16,439,359,000 5,934,785,000 36.1 56.77 Total Manufacturing 26,230,528,000 6,885,219,480 26.25 58.21 Sector Total All Companies 52,444,527,000 11,390,606,980 21.72 64.24

Figure 7.2

Comparison of Income & IT Expenses for Comapanies for the year 1999-2004 e 100% 80% 60% of Incom of 40% 20% 0% Expense % Expense Local Tatal Sector Total All Sector Foreign Compani es Local Banks Local anufacturing anufacturing anufacturing Foreign Banks Tatal Banking M M M Series1 Series2

Series 1 Show the Income Series 2 Show the Expense % of Income

Income & IT Expense Comparison for all Companies for the year 1999-2004 Table 7.4(c) For Group 2 : n=32 Sector Net Income IT Expenses Expenses %of income Foreign Banks 18,616,763,000 2,460,082,000 13.21 Local Banks 28,710,716,000 4,479,494,500 15.60 Total Banking Sector 47,327,479,000 6,939,576,500 14.66 Local Manufacturing 16,455,436,909 1,436,243,780 08.73 Foreign Manufacturing 17,604,147,000 6,055,853,900 34.40 Total Manufacturing Sector 34,059,583,909 7,492,097,680 22.00 Total All Companies 81,387,062,909 14,431,674,180 17.73

Figure 7.3

Comparison of Income & IT Expenses for Comapanies for the year 1999-2004 100% 80% 60% 40% 20% 0% Expense % of Income of % Expense Local Tatal Total All Sector Sector Foreign Companies Local Banks Foreign Banks Foreign Banking Tatal Manufacturing Manufacturing Manufacturing Series1 Series2

Series 1 Show the Income Series 2 Show the Expense % of Income

ii. Manufacturing Sector

184

a. Local Manufacturing Companies : The regression analysis shows that IT has positive impacts on the incomes of the local manufacturing companies i.e Atlas Honda and Lakson Tobacco (p-values < 0.05). But IT has no impact on the income of D.G. Cement, Packages and Services Industries, (p-value > 0.05).

Further analysis for all local manufacturing companies for the years 1990-2004 and 1999- 2004 shows that IT has positive impacts on income of all the local companies as p-value is far below .05 for group 1 and 2 (Table 6.1 & 6.2). The regression coefficient for these companies is positive, which indicates the decisive impact of IT on income. At the same time, net income for these companies for the years 1990-2004 is PKR 14.118 billions and IT expenditures are 1.374 billions which are only 9.73% of net income. Whereas, net income for the year 1999-2004 is 9.791 billions and IT expenses are 950,434,480 that are 9.71% of the net income of 1999-2004 but 69.17% out of total IT expenditure of 1990-2004. For group 2 the net income for these companies for the years 1999-2004 is PKR 16.455 billions and IT expense are 1.436 billions which are low as 8.73% of net income.

As seen from graph in Annexure V & VI, there is a gradual increase in total and IT employees till year 2002. It is due to the facts that some of these companies have expanded their operations during these years and consequently the volume of transaction/job has been increased, resulting therein an increase in staff strength. After year 2002, there is a slight decrease in IT employees because of the reasons that some of these companies have implemented S.A.P and their major IT systems are being maintained by outsourced staff of SAP provider.

b. Foreign Manufacturing Companies : It has also been observed from regression analysis that IT has no impact on the incomes of I.C.I and Unilever Pakistan Ltd (p-values > 0.05). Furthermore there are three companies, SIMENS Pakistan Ltd, Suzuki Ltd and P.T.C for which IT has positive impacts on the income (p-value< 0.05). Our analysis for group 1 and for group 2 presents that IT has no impacts on income of foreign companies as overall (p-value>0.05). The net income for these companies for the years 1990-2004 is PKR

185 22.371 billions and IT expense are 10.453 billions, which are high as 46.73%. Where as net income for the year 1999-2004 is 16.439 billions and IT expenses are 5.934 billions, which are 36.10% of the net income but 56.77% of the total IT expenditure from 1990-2004.

For group 2, net income for the years 1999-2004 is PKR 17.604 billions and IT expense are 6.055 billions, which are 34.40% of net income.

Like local companies, there has been an increase in total and IT employees. Graphs in Annexure VII & VIII represents these results. Again this increase is considered due to expansion in production over the period of last ten years. It is because of this, that the volume of transactions/jobs and employees have been increased

186 c. All Manufacturing Companies: The overall analysis of all the manufacturing companies for group 1 & 2 further validated that IT has no impacts on income of all the manufacturing companies (p-value >.05). But surprisingly, there is marvelous increase in the net income for all the manufacturing companies for the years 1990-2004, i.e. PKR 36.490 billions and IT expense are 11. 827 billions being 32.41% of net income. For the years 1999- 2004 net income for these companies is 26.230 billions and IT expenses are 6.885 billions which are 26.25% of net income. There is an increase in the IT expenses during the last six years i.e. 1999-2004 as IT expense ratio of net income is 58.21% out of the total IT expenses for the years 1990-2004 despite of the above facts that IT is not contributing more to incomes of these companies. There is an increase in total and IT employees and this increase is due to the same reasons as mentioned above. Graphs in Annexure XI & XII present clearly these effects.

For group 2 the net income for all the manufacturing companies for the years 1999-2004 is PKR 34.059 billions and IT expense are 7.492 billions which are 22% of net income. The regression coefficient is positive for this group. Similar to group 1, the same pattern of increase in total and IT employees appears.

It is more obvious if we look into the computer usage statistic of manufacturing companies in Annexure XXII that only those manufacturing companies (local & foreign) dominate the scene which have excellent IT systems and have also implemented world class S.A.P (ERP) systems.

iii. All Companies In Both The Sectors: After analyzing the performance of individual sector, the analysis is made to know about performance of all the companies in banking and manufacturing sectors for group 1 and 2. As discerned, IT has positive impacts on income of all the companies (p-value<0.05) Table 7.2(c,d). The regression coefficient is also positive which shows that there is an increase in income after increase in IT expenses. So far net income for all the manufacturing companies for the years 1990-2004 is concerned, it is PKR 75.960 billions and IT expenses are 17. 730 billions which are 23.34% of net income for 1990-2004. For the years 1999-2004 net

187 income for all companies is 52.444 billions and IT expenses are 11.390 billions which are 21.72% of net income. Similarly, net incomes for group 2 for all the companies for the years 1999-2004 are PKR 81.387 billions and IT expenses are 14.431 billions which are 17.73% of net income. There appears to be constant increasing trends in the IT expenditures during the last six years i.e. 1999-2004 in both the sectors. As the IT expense for these years for both the sectors are 64.24% out of total IT expenses for the years 1990-2004. So far as total and IT staff strength is concerned as reported in graph in Annexure XIII, there is an increase in IT but decrease in total staff and reasons for this increase have already been discussed in detail in individual banking and manufacturing sections. iv) Conclusions It would appear from above analyses that IT in Pakistan is being applied aggressively both in manufacturing and banking sectors as these companies investing billions of rupees on it. It is also evident that it is being used more efficiently in banking sector than the manufacturing sector. The following salient points of above discussion are worth stressing that 1) the local banking sector of Pakistan is using IT more than the foreign banks because of intensive competition and increased branch network 2) Though multinationals in Pakistan are seen as a means of bringing in new technology and work practices and providing training grounds for the work force but there is high rise in IT investments in local baking sector in the latest IT systems in the recent years as compared to foreign banking sectors as percentage of IT expenses for the years 1999-2004 for total banking sector, are 76.33%, out of their total IT expenses for the years 1990-2004. 3) the percentage increase in IT expenses in local banks is 82.53% for the year 1999-2004 out of expenses of the years 1990-2004, which is much higher than the foreign banks where %age increase is 61.20%. 4) in comparison of local versus foreign manufacturing companies mixed trends have been observed in IT spending. The IT expenses percentage is 69.17% and 56% respectively for both the sectors out of incomes of years 1990-2004. But surprisingly, percentage IT expense for local and foreign companies for the years 1990-2004 as a whole are 29.73% and 42.33%. For group 2 these expenses %ages are 18.33 and 34 respectively. It is, therefore, evident that overall foreign manufacturing sector is investing more in IT than the local manufacturing sector. 5) overall, there is remarkable increase in the IT expenses and in income in return, of

188 all the companies, given to the facts that IT expenses are 17.730 billions in 1990-2004 and in 1999-2004, these are 11. 390 billions which are 64.24% of total IT expenses. The net income is 75.960,668,000 in the years 1990-2004 and for the years 1999-2004 it is 52,44,527,000. The percentage increase in net income thus comes to 69.04% for year 1990-2004.

We find strong evidence through above facts that though manufacturing sector is investing much more in IT but the banking sector surpass the manufacturing sector in performance as their incomes are very high. On the other hand the study also detected that there is an increase in IT employees in both the sectors due to increased work because of expansion of operations of the companies over the years but decrease in total employees because of implementation of down/right sizing policies in local baking sector since 1990s. In line with above results, in conclusion, we say that IT investments have positive impacts on the performance of the organizations and we accept our research hypotheses.

2) Analysis of performance Indicators 7.3.0 This section examines the performance of both the sectors of economy i.e. manufacturing and banking in term of increase/decrease in performance indicators. The literature identified a number of indicators of organizational performance such as customer satisfaction, customer suppliers links, company image, job interest of employees, stake holder’s confidence and inters office links/communication. In the questionnaire the respondents were asked that after implementation of IT what increase they have observed with respect to a particular performance indicator. In this part of discussion we determine increase or decrease in these indicators after implementing IT. The response options of respondents were anchored in a three-point scale ranging from 1(no increase), 2(moderate increase) and 3 (high increase) for each benefit. For discussion purpose “Substantial increase” has been defined as “above average’ i.e. average score greater than 2. Increase in all these traits have been observed for all companies in both sectors. For each trait two different research hypotheses have been tested as under:

Research Hypothesis No.1(b): “There has been substantial increase with respect to the given indicator in the given sector, after implementation of IT.” Translation of this in terms of statistical hypotheses is as under:

H0: µ ≤ 2

189 H1: µ > 2 This one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. Research Hypothesis No.1(bb): “The change in the given indicator after implementation of IT is not the same in all the four sectors”.

Translation of this in terms of statistical hypotheses is as follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. This hypothesis was tested using one way ANOVA technique at level of significance of 0.05. Again, the rejection of the null hypothesis means, the acceptance of the research hypothesis. Rejection of the null hypothesis implies that not all means are same i.e. all means may be different or some may be same or some may be different. The post hoc tests about pair-wise comparison ( H 0 : µi = µ j vs. H1 : µi ≠ µ j fori ≠ j ) were performed using Scheffe test statistic. The benefit wise analysis is discussed in ensuing sections and summaries of ANOVA results for all benefits are presented in Table 7.6. 1. Customer Satisfaction Research Hypothesis No 1(b1): There has been substantial increase with respect to customer satisfaction in the given sector, after implementation of IT. In terms of statistical terms:

H0: µ ≤ 2

H1: µ > 2 This one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. Table 7.5 In individual sector analysis it is observed that p-value for local banks and foreign banks is less than 0.05, and for local manufacturing and foreign manufacturing it is greater than 0.05. Table 7.5. This implies an ‘above average’ increase in customer satisfaction for banking sector but not so increase in manufacturing. This is confirmed when sector wise comparison is made between banking and manufacturing sectors, again it appears that p-value for banking sector is less than 0.05 and for manufacturing sector it is greater than 0.05. Though means for both the sectors are greater than 2 but value of means for manufacturing sector is not so significantly greater. It indicates that there is substantial increase in customer satisfaction in banking sector

190 but not so increase in manufacturing sector. In overall comparison of all the four sectors, we note that p-value is far below 0.05 and average means are greater than 2. It shows that there is substantial increase in customer satisfaction in all the four sectors. Table 7.5 represents summary of all the results of t-test for customer satisfaction. In conclusion, we can say that after implementing IT, there has been increase in customer satisfaction in all four sectors of the economy and this increase has been substantial or above average in case of entire banking sector. Results Summary of One-Sample t-Test Table 7.5 Customer Satisfaction Sector n Meant-statistics p-value All Banking & Manufacturing 48 2.4 4.78 0.000 Banking 24 2.67 6.78 0.000 Manufacturing 24 2.12 1.14 0.133 Local Banks 12 2.75 5.74 0.000 Foreign Banks 12 2.58 3.92 0.001 Local Manufacturing 12 2.08 0.43 0.337 Foreign Manufacturing 12 2.17 1.48 0.083

Research Hypothesis No.1(bb1): “The change in the customer satisfaction after implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses follows as:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. The ANOVA results given in Table 7.6 show that customer satisfaction has not increased in all the sectors uniformly (p = 0.007<0.05) thus, supporting above conclusions. This represents that all the four sectors have benefited with customer satisfaction but differently by adopting IT. Scheffe test further revealed in pair-wise comparison that customer satisfaction level differ between banking and manufacturing industries. There is difference between sector 1 (local banks) and sector 4 (Local manufacturing),1 (local banks) and 3 (foreign manufacturing) as shown diagrammatically below;

Sectors 4 3 2 1

191 Means 2.08 2.17 2.58 2.75

Figure 7.4 Schematic diagram for ordered means

One way ANOVA Results Summary IT Adoption Benefits Table 7.6 For all Companies n=48 ANOVA Results Sr. Variable Name Average no F-Value P-value Mean 1 Customer Satisfaction 2.4143 4.655 .007 Better Customer/ Service 2 2.3958 7.702 .000 Links 3 Company Image 2.7500 .277 .842 4 Job Interest of Employee 2.5833 4.423 .008 5 Stake Holder Confidence 2.5000 1.782 .165 Inter Office 6 2.6875 1.658 .190 Links/Communication

We conclude our discussion on this trait by observing that in general IT has increased customer satisfaction but this increase is greater in banking sector, particularly local banks as compared to manufacturing sectors. The possible reason of this difference could be, that banking sector has introduce modern technological innovations relating to interactive customer services such as ATM, On-Line banking, Call Centers, Mobile banking, Internet banking and other E-banking facilities, which are very much visible to the customers and they are benefiting directly from these. Conversely, manufacturing sector has lagged behind until recently in such type of technological services. Most of the companies in this sector are still using IT for ‘traditional systems’ for which customer has no direct interaction/interest.

2. Better Customer/ Supplier Links Research Hypothesis No 1(b2): The customer/Suppliers links has increased substantially in the given sector, after implementation of IT. As described above, in statistical terms:

H0: µ ≤ 2

H1: µ > 2

192 To test this one-sided hypothesis t-test statistic at level of significance of 0.05 was carried out. First we analyzed the performance of individual sector with respect to above indicator and then performance is analyzed as a whole. This analysis revealed that p-value for local, foreign banks and foreign manufacturing is <0.05, while for local manufacturing it is > 0.05. It implies that although increase in customer/supplier links has been observed for all sectors but substantial increase is in all the companies except local manufacturing. If we look at both the sectors and all the companies combine, except for manufacturing sector, there has been substantial increase in customer/supplier links in all companies, banking sector (p-value <0.05). Table 7.7 represents summary of all the results of t-test for customer/supplier links.

Results Summary of One-Sample t-Test Table 7.7 Better Customer Links Sector n Meant-statistics p-value All Banking & Manufacturing 48 2.42 4.25 0.000 Banking 24 2.60 4.90 0.000 Manufacturing 24 2.25 1.66 0.055 Local Banks 12 2.75 5.74 0.000 Foreign Banks 12 2.42 2.16 0.027 Local Manufacturing 12 1.75 1.39 0.904 Foreign Manufacturing 12 2.75 5.41 0.000

Research Hypothesis No.1(bb2): “The change in the customer/supplier links after implementation of IT is not the same in all the four sectors”. This hypothesis is translated in term of statistical form as following:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

ANOVA results as given in Table 7.6 indicates that the customer/supplier links has been increased in all the sectors but differently (F= 7.702, p-value = 0.000,<0.05). This represents that all the four sectors have benefited with customer/supplier links but to different extent by

193 adopting IT. The subsequent Scheffe test statistics for pair-wise comparison showed that customer/supplier links differ between banking and manufacturing industries as shown below. Customer/supplier links has also been different for local banks and local manufacturing and between local banks and foreign manufacturing. The highest mean, 2.75 for sector 1, is significantly greater (or different) than means 2.42 for sector 2 and 1.75 for sector 4. The mean 2.67 for sector 3 is significantly greater than mean 1.75 for sector 4.

Sectors 4 2 3 1 Means 1.75 2.42 2.67 2.75

Figure 7.5 Schematic diagram for ordered means

It is summarized that customers/supplies links for all companies, for banking sector and foreign manufacturing has increased substantially. Increase in foreign manufacturing is higher then all other sectors but no increase in local manufacturing companies. These differences are not surprising given to the facts that most of the banking and foreign manufacturing organizations are using state-of-the-art IT systems including SAP/Oracle ERP systems which have given them a competitive edge over other companies and improved their customer/supplier links, while except few most of local companies are still relying on their old system. 3. Company Image. Research Hypothesis No 1(b3): “There is substantial increase in company image in the given sector, due to implementation of IT”. As described above, statistically it implies:

H0: µ ≤ 2

H1: µ > 2 This one-sided hypothesis is again tested by t-test statistic at level of significance of 0.05. The analysis showed that p-value for overall all the companies, for banking and manufacturing sectors, for local, foreign banks and for local, foreign manufacturing is zero and thus less than 0.05. It reflects that there is substantial increase is company image for all the individual company and all the sectors. Table 7.8 reports results of t-test for company image.

194 Results Summary of One-Sample t-Test Table 7.8 Company Image Sector n Meant-statistics p-value All Banking & Manufacturing 48 2.75 11.87 0.000 Banking 24 2.71 7.47 0.000 Manufacturing 24 2.80 9.35 0.000 Local Banks 12 2.75 5.74 0.000 Foreign Banks 12 2.67 4.69 0.000 Local Manufacturing 12 2.67 4.69 0.000 Foreign Manufacturing 12 2.92 11.00 0.000

Research Hypothesis No.1(bb3): “The change in the Company image links after implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses is as follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. ANOVA results reported in Table 7.6 indicate that the company image of all the sectors is increased uniformly (F= .277 and p-value = 0.842 >0.05). Since IT is being used extensively in all the sectors of sample so, it has increased the company’s image in the mind of all the stack holders of these companies. They feel that more accurate performance/results are an outcome of IT. IT usage leaves good impression in the mind of peoples who have or not have any concern with the company and IT has now become the necessity for daily office work, not only the symbolic thing.

4. Job Interest Of Employees Research Hypothesis No 1(b4): “The job interest of employees has been substantially increased in the given sector, after implementation of IT”. As described above, statistically it implies:

H0: µ ≤ 2

H1: µ > 2

195 Again a one-sided hypothesis t-test statistic was used at level of significance of 0.05, which is carried out to analyze performance of individual and all sectors with respect to above indicator. The p-values for local banks, local and foreign manufacturing is less than 0.5 which implies that job interest of employees in all these sectors have increased substantially. Table 7.9 below indicates summary of results of t-test for job interest of employees.

Results Summary of One-Sample t-Test Table 7.9 Job Interest of Employees Sector N Meant-value p-value All Banking & Manufacturing 48 2.56 7.19 0.000 Banking 24 2.33 2.89 0.004 Manufacturing 24 2.80 9.35 0.000 Local Banks 12 2.42 2.80 0.009 Foreign Banks 12 2.25 1.39 0.096 Local Manufacturing 12 2.83 7.42 0.000 Foreign Manufacturing 12 2.75 5.74 0.000 Research Hypothesis No.1(bb4): “The change in the job interest of employees after implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. ANOVA results as given in Table 7.6 further prove that the job interest of employees in all the sectors have increased but differently (F= 4.423 and p-value = 0.008 <0.05). This means that all the four sectors have benefited with increased job interest of employees but differently by adopting IT. Furthermore, Scheffe test statistics for pair-wise comparison reveals that job interest of employee differ for banking and manufacturing industries as shown below. The highest mean, 2.83 for sector 4, is significantly greater (or different) than means 2.25 for sector 2. The mean 2.83 for sector 3 is significantly greater than mean 2.25 for sector 2 and 2.42 for sector 1.

Sectors 2 1 4 3 Means 2.25 2.42 2.83 2.83

196

Figure 7.6: Schematic diagram for ordered means In brief, we conclude that IT has substantially increased job interest of employees as IT facilitates the employees to carrying out all their daily official jobs/activities. The jobs/work which created boredom for employees in the past now are matter of more interest because of IT ease. In Pakistan, as discussed in length in the literature review, initially employees were reluctant to use IT but after seeing its benefits/growth world wide, they are forced to rethink and their dependence on IT has increased.

5. Stakeholder Confidence Research Hypothesis No 1(b5): “The stakeholder confidence has shown substantial increased in the given sector, after implementation of IT”. As described above, statistically it implies:

H0: µ ≤ 2

H1: µ > 2 To test this one-sided hypothesis, t-test statistic at level of significance of 0.05 was used. The analysis guided to the facts that p-value for local, foreign banks and foreign manufacturing is less than 0.05, while for local manufacturing it is greater than 0.05. It means that although increase in stake holder confidence has been observed for all sectors but substantial increase is in all sectors except local manufacturing. The individual and overall sector wise analysis also indicated that there has been substantial increase in stake holder confidence in all companies and banking sector (p<0.05) except for manufacturing sector where p >0.05. Table 7.10 exhibits summary of all the results of t-test for stake holder confidence. Results Summary of One-Sample t-Test Table 7.10 Stake Holder Confidence Sector N Meant-value p-value All Banking & Manufacturing 48 2.50 5.31 0.000 Banking 24 2.46 3.82 0.000 Manufacturing 24 2.54 3.68 0.001 Local Banks 12 2.42 2.16 0.027 Foreign Banks 12 2.50 3.32 0.003

197 Local Manufacturing 12 2.25 1.00 0.169 Foreign Manufacturing 12 2.83 7.42 0.000 Research Hypothesis No.1(bb5): The change in the stake holder confidence after implementation of IT is not the same in all the four sectors. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. To test this hypothesis again ANOVA analysis has been repeated(Table 7.6). Its results are given in Table 7.6. There is uniform increase in stake holder confidence in all the sectors (F=1.782, p=.165 > 0.05). This represents that all the four sectors have benefited with customer/supplier links but in same way by adopting IT.

It is inferred overall that stake holder confidence for all companies, for banking sector and foreign manufacturing has increased substantially. Increase in foreign manufacturing is higher than all other sectors but no substantial increase in local companies. It can be argued that these differences are due to the facts that use of IT in the companies has given rise to accuracy/performance, resulting therein an increase in the confidence of its stack holders. 6. Interoffice Links. Research Hypothesis No 1(b6): “The interoffice link has been substantially increased in the given sector, after implementation of IT”. As described above, statistically it implies:

H0: µ ≤ 2

H1: µ > 2 For testing of above one-sided hypothesis, t-test statistic was applied at significance level of 0.05. The analysis shows that p-value for local, foreign banks and foreign manufacturing is less than 0.05, while for local manufacturing it is found to be greater than 0.05. It means that there is substantial increase in interoffice links for all sectors except local manufacturing. Table 7.11. Results Summary of One-Sample t-Test Table 7.11 Interoffice Links Sector n Meant-value p-value All Banking & Manufacturing 48 2.69 7.25 0.000

198 Banking 24 2.67 5.13 0.000 Manufacturing 24 2.71 5.03 0.000 Local Banks 12 2.67 3.55 0.002 Foreign Banks 12 2.67 3.55 0.002 Local Manufacturing 12 2.42 1.60 0.069 Foreign Manufacturing 12 2.80 7.90 0.000

Research Hypothesis No.1(bb6): “The change in the interoffice links after implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. Similar to above indicators for test of this hypothesis too, again ANOVA procedure is applied. Results are shown in Table 7.6 which indicate that the interoffice communication links has been increased in all the sectors but uniformly (F=1.658, p = 0.190 > 0.05). This represents that all the four sectors have benefited with same level increased interoffice communication.

Overall, it is observed in above analysis that interoffice communication links have been increased for all the sectors after implementation of IT, owing to the reasons that almost all the companies now using Internet, Intranet, though ISDN, DSL, Radio and VSAT etc links. These links provide them speedy connectivity among their various offices spread over in remote areas, and 24hrs of the day.

Overall Conclusion Hypothesis 1 7.3.1 From the above analyses and discussions it is observed that implementation of IT has positive impact on working of banking and manufacturing sectors of Pakistan. This positive impact has been demonstrated both in quantitative and qualitative terms. In general, incomes of all the companies in all sectors have increased after introduction of IT in recent years. The IT expenses have also been increased for the last few years. The banking sector showed good performance and continued growth with IT as their incomes increased but manufacturing sector provided mixed flavors. Also, with the implementation of IT, persons qualified in IT have been

199 able to secure a higher share in terms of employment. Significant improvements with respect to qualitative measures such as customer satisfaction, customer/suppliers links, company image, job interest of employees, stakeholders’ confidence and inter office links/communication have been observed. Such improvements and enhancements in performance with respect to the traits studied have been substantial in both the sectors and banking in particular. Overall, implementation of IT has opened new and wider avenues in all the companies of both the sectors in sample.

Hypothesis 2

7.4.0 Research Hypothesis No.2: “Organizational performance of IT based organizations is associated with the functions/purpose IT is playing, type of Hardware/Software being used and level of Information Systems an organization has attained”.

To test this hypothesis the organizational performance of the organization has been studied in following perspectives. a) IT Purpose/function analysis b) Application Software usage analysis c) Information Systems Level analysis

The responses of the firms were recorded in the form of yes(being used) or no(not being used), which then are dummy coded as ‘1’ and ‘0’ for analysis purpose. As described below two hypotheses have been tested for each of the above categories and explained separately in the following discussions.

a) Functions IT playing in the organizations.

200 The literature has identified following functions for which IT is normally used in any organization:

1) programming, systems development and maintenance 2) telecommunication management 3) business process reengineering 4) strategy formulation and organization transformation 5) product innovations.

First it is analyzed that for what which is the most used functions/purpose of IT and what impact it has on organization performance. The hypothesis 2(a1) below looks at effect of any of the functions/purposes of IT on the management performance, whereas the hypotheses 2(a2) explores if there is any relationship between different sectors and the purpose for which IT being employed.

Hypothesis No. 2(a1): “Organizational performance depends on the function/purpose for which IT is being used.”

To test this hypothesis, an index has been developed to measure ‘organizational performance’ by adding the scores of each company on all five performance indicators used in second part of the first hypothesis i.e. customer satisfaction, customer/suppliers links, company image, job interest of employees, stake holders confidence and inter office links/communication. Multiple regression analysis was performed taking ‘management performance’ as dependent variable and the above mentioned five indicators as independent variables. In statistical terms, the hypothesis may be written as: H : β = β = β = β = β = 0 0 1 2 3 4 5 H1 : Not all β 's are zero.

Regression Results Summary (α = 0.05) IT Levels VS Performance Indicators Table 7.12(a) Year 1990-2004 Results S/No IT Level β coefficient t-Statistics p-value

201 1 Executive Support System -.638 -.727 .471 2 Decision Support System 1.087 1.171 .248 3 Management Information System 4.336 2.480 .017 4 Transaction Processing System No Statistic Constant Constant

Regression Results Summary (α = 0.05) IT Levels/functions/software VS Performance Indicators Table 7.12(b) Year 1990-2004 ANOVA Results S/No IT Level F-Statistics p-value 1 IT Functions 2.328 .059 2 Application Software Usage 1.675 .173 3 IT Levels 3.556 .022

The global test has failed to reject Ho(p-value=0.059 > 0.05). It means that the management performance is not dependent on (or associated with) any of the above functions of IT. As stated earlier, in the second hypothesis we explore presence of any association between a sector and functions. That is;

Hypothesis No 2(a2): “All sectors are using IT for different purposes/functions.”. The following hypothesis represents this in statistical form.

H0 : There is no association between sectors and types of functions/purposes for which IT is used.

H1 : There is an association between sectors and types of functions/purposes for which IT is used.

Test of association using chi-square statistic was applied for this test. With the (p- value=0.842>0.05) Table 7.13, for IT functions, we accept the null hypothesis. It implies that all sectors are using IT for these functions with equal proportion. No sector is showing any preference to a particular purpose. Table 7.13 Chi-Square Results of Different Problems/Test Variable

S/No Problems/Test Variables Chi-Square Results

1 0.822 Application Software Usage Analysis

2 0.842 Functions IT playing in Organization

3 0.996 Information System Levels

202 Figure 7.7 As Function IT Playing in Organization: All Companies show 50 45 n in 40 35 Figu 30 25 re 20 15 IT Functions Functions IT 10 7.7 it 5 0 is Telecommunication Programming, Business Process Strategy Products Management system Reengineering Formulation & org. innovations obser Development & Transformation Maintenance ved in a comparative analysis that out of above five functions, telecommunication management is identified as the most used function in the organization having the highest sum of 46 out of 48. The programming function is the second most important function with sum of 43, business process reengineering function is ranked as third most used function having sum of 33, while strategy formulation and product innovation function are ranked at 4th and 5th with sum of 29 and 27 respectively. All this reveals that in most of companies operating in Pakistan, IT is still being used mostly for telecommunication and programming development / maintenance functions. It also look that there is change occurring in this traditional role of IT and it is acquiring new role as a business process reengineer, strategy formulator and product innovator gradually. Frequency of score of each function is given in Annexure XV.

b) Application Software Usage Analysis: As identified in the literature IT systems help us to accelerate communication process, reducing cycle time and collaborate work process. IT systems facilitate organization’s responsible icon to brows company’s information and world-based update within seconds. Today’s IT managers believe that any organization’s global existence is only possible when you make excellent use of a wide variety of IT systems. Electronic business acceleration is mainly dependent now on ERP systems. An ERP systems as defined by Bakry and Bakry(2005) is “an integrated information system software comprised of several modules that share a central database, designed to automate business process across the enterprise”. Through ERP all the departments of the

203 company are integrated and now it has become the crux of the business activates. ERP flourish electronic business in a way as one can browse from any corners of the world all information pertaining to the company.

As the modern organizational need is based on faster integration, collaboration and coordination throughout the world so managers have no choice except installing flexible and smoothly compatible ERP in the organization, which give real-time, global, secure and simultaneous communications. Feeling this need, the organizations are developing their own ERP systems or using standard customize ERP solutions i.e. SAP, JD Edward, Oracles, Misys, Fidielty and Sibel in manufacturing and banking. The following application software/programs are investigated to test hypothesis.

1. Vendor supplied IT software systems. 2. Standard customize ERP system i.e. SAP, Oracle (JD Edwards), Misys, Sibel etc 3. In house developed IT systems 4. Consultants’ developed systems 5. Copied IT software systems.

Hypothesis No 2(b1). “Organizational performance of IT based organization is dependant upon the type of application software package/type being used in the organizations”.

Multiple regression analysis was again performed taking ‘management performance’ as dependent variable and the above mentioned five software types as independent variables. Statistically, the hypothesis may be written as: H : β = β = β = β = β = 0 0 1 2 3 4 5 H1 : Not all β 's are zero. Table 7.12(b) displays that (p-value = 0.173 > 0.05) for this global test and thus the above null hypothesis is accepted. It means that the management performance is not dependent on (or associated with) any of the above mentioned software/program used.

204 Hypothesis No 2(b2): “All sectors are using the above software to the same extent”. The following hypothesis represents this in statistical form.

H0 : There is no association between sectors and types of software/systems used.

H1 : There is an association between sectors and types of software/systems used.

The above hypotheses were tested using chi square statistic (p-value = 0.842 > 0.05), thus we accept the null hypothesis. It implies that all sectors are using these software systems with equal proportion. No sector is showing any preference to a particular software/program. Further, a comparative analysis of usage of aforementioned application software systems also shows that out of above mentioned five types of systems most of the companies in both the sectors are mostly using in house developed systems as it is being used in 35 out of 48 companies in sample. About 24 companies are using consultants’ developed systems and 17 companies are using standard ERP applications systems. Only one company in local banks i.e. First Women bank is using copied software (provided to them by U.B.L on government instructions). The results of comparison of banking versus manufacturing also reveal that the manufacturing sector tends to use ‘standard systems’ more than banking companies, as 13 foreign and 4 local companies are using standard systems. At the same time about 21 banking and 14 manufacturing companies are using in house developed systems. As far as consultant development systems are concerned about 13 banks and 11 manufacturing companies are using these systems. Only one bank discussed above is using copied software and none of the company in the sample is using vendor supplied systems. In comparison of local organizations VS foreign organizations, in local organization again 8 companies are using standard software while in foreign score is 9. About 21 local and 14 foreign companies are using in house developed systems. So far as consultant’s developed systems are concerned 18 local and 6 foreign companies are using these systems. No foreign company is using copied software(Annexure XVI). Data reported in (Figure 7.8) indicates all these results graphically.

205 Figure7.8

Application Software Use Analysis: All Companies

40 35 30 25 20 15 10 5 0 No Of Companies Copied Vendor ERP Software Supplied System In house In Standard Systems Developed ORACLES application; Systems i.e MSYS, SAP, Developed Consultants'

It is concluded therefore, that still companies in both the sectors are relying most on their own developed system or systems developed for them by the consultants. However, as the time requires ERP systems are getting introduction. So far, in banking sector only three banks i.e. H.B.L, M.C.B and Faisal are implementing standard applications/ERP system for their core areas (HBL is converting their old MOBS system to MISYS. M.C.B and Faisal Bank are implementing Siebel). No foreign bank is using any standard application. Many foreign manufacturing companies like P.T.C, Reckitt Benkiser, Nestle, and Philips, are also using SAP and JD Edward (Oracle) but only two companies in local sector i.e. Packages and Honda Atlas are using SAP.

In summary, at present, except few, most of the companies are relying on their own or consultant’s developed system. But the opened avenues of electronic business are to accelerate electronic activities which have created the need of customized systems, organizations to have complete and versatile IT solution to be connected with all the stake holders have started to install some best and best of breed IT systems for their successful business activities. New systems and dependency on them is increasing day by day and they always looking for the best service. The computer usage statistic of all the companies in sample in Annexure XXII shows a clear picture of computerization status of sample firms. c) Information System Levels Analysis.

206 As discussed in the literature there are many IT systems for different setups in various categories which facilitate the organizations to accelerate their work in this e-culture. These systems have the room to facilitate different users, an assembly worker to company’s C.E.O. In the modern organizations transaction processing systems, management information systems (MIS), decision support systems (DSS) and executive support systems are paramount IT systems levels. The literature has identified that in an individual prospective and organizational exposure with diversified activities, there exist one or all the above systems, which ultimately increases the performance of the individuals and organizations. The adoption of these systems enables the organization to enjoy modern race to reach at the successful target of e-commerce business environment. In the foregoing analysis the following IT system levels were tested;

1. Executive support system 2. Decision support system 3. Management information system 4. Transaction processing system.

Again, two hypotheses have been constructed for testing. The first hypothesis looks at effect of information system levels on the management performance. The second hypothesis explores if there is any relationship between different sectors and the information system level being used.

Hypothesis No. 2(c1): “Organizational performance depends on information system levels being used”.

To test this hypothesis, multiple regression analysis was performed taking ‘management performance’ as dependent variable and the above mentioned four information system levels as independent variables. In statistical terms, the hypothesis may be written as: H : β = β = β = β = 0 0 1 2 3 4 H1 : Not all β 's are zero. The null hypothesis is rejected as the (p-value = 0.022 < 0.05) for information systems levels. It means that the management performance is dependent on (or associated with) a particular type of

207 information system level. From t statistic Table 7.12(a) only regression coefficient being significantly different from zero is that of management information system (MIS), (p-value = 0.017 < 0.05). Positive value of regression coefficient for management information system shows that the use of MIS has resulted into enhancement of management performance.

In the second hypothesis we look for presence of any association between a sector and functions. It is stated as; Hypothesis No 2(c2) “All sectors are using the IT levels to same extent.” It is represented in statistical form as;

H0 : There is no association between sectors and types of information system level used.

H1 : There is an association between sectors and types of information system level used.

Test of association using chi square statistic was used. The p value as shown in the table comes to be 0.996 > 0.05 thus accepting the null hypothesis. It implies that all sectors are using these information system levels with equal proportion. No sector is showing any preference to a particular information system level. Figure 7.9

Information System Level in Organization: All Companies

60 50 40 30 20 10 0 No Of Companies Support Decision systems Support Systems system Executive System processing Transaction information Management

A comparative analysis also shows that out of 4 above systems transaction processing system is having the highest score of 48 out of 48. The 46 out of 48 companies believe that they are using M.I.S levels systems. About 29 companies have ‘Decision Support’ level and 24 replied that

208 their IT systems do support ‘Executive Support Systems’. The sum score highlights in comparison between Banking Vs Manufacturing sectors that both the sectors have TPS. While 22 banking and 24 manufacturing companies confirm that their IT level is MIS. About 13 manufacturing companies and 16 manufacturing companies believe they have DSS. About executive support systems both the sectors have equal score of 12.

In comparison of local VS foreign companies, for TPS and MIS both sectors have close score i.e. 24 and 23 each and for DSS and ESS, foreign companies have high score i.e. 16 for each and local companies have score of 13 and 8 respectively. Finally, to say that majority of companies operating in Pakistan have not achieved ESS and DSS levels of IT systems, companies with well good ERP solution which give real time, global, secure and prompt communication, enjoying the benefits of most of the above systems but most of the companies enjoying middle level MIS systems which are capable of using and transmitting information. Overall, the systems usage level of foreign banks and manufacturing companies are higher than local companies. Overall Conclusions Hypothesis 2. 7.6.0. The findings of above discussion reveal that organizational performance of organizations does not depend on the functions IT plays or type of Hardware/Software being used. However, it does depend on information systems levels. Organizations that have attained MIS level are performing well. Most of the companies are still working with their in-house developed systems and do not have any standard application for their core areas but their performance is good. Since transformation for global IT connectivity is taking place, so the need to update old IT system or to use standard applications is evolving rapidly in all the organizations.

Hypothesis 3 7.5.0 The factors affecting the implementation of IT in the organizations are numerous. These may be of interest not only to academicians but also to managers working in the organizations. In the literature review, however, few of the important factors such as culture, organizational, governmental, political, economical, human etc along with their relationship/impact on organizational IT adoption were broadly discussed. This section of the study seeks to explore the impact/relationship of certain variables/problems on implementation of IT in the organizations.

209 The variables/problems tested are divided into two groups for discussion purpose: a) IT adoption problems b) Socio-Cultural/organizational/systemic variables.

a) IT adoption problems. The literature has identified many problems which are normally faced by the companies while implementing any new technology. This part of discussion examines eight different problems and their impact on performance of each organization. The responses of different managers of these companies are recorded in ‘yes’ showing existence or ‘no’ non existence of problem. These responses then are dummy coded as ‘1’ or ‘0’ respectively for analysis purpose. The problems included are:

1) Lack of adequate trained employees, 2) Pakistan inadequate telecommunication infrastructure, 3) Lack of proper IT planning, 4) Selection of proper IT systems, 5) Judicious use of computer, 6) Management unawareness on IT systems, 7) Employees non cooperation and 8) Management shirks to investments.

Cross-Tabulation of the data and chi-square statistic were used for analysis. Results are discussed as under and their summary is given in Table 7.14. Frequency table for each problem is presented in Annexure XVIII.

Table 7.14 Chi-Square Results of Different Problems/Test Variable

S/No Problems/Test Variables Chi-Square (p-value)

1 0.932 IT Adoption problems

2 0.751 Measures to overcome IT Problems

3 0.983 Reason of IT Success in Org. 4 IT Relative Advantages 0.801

210

Figure 7.10

IT Adoption Problem: All Companies

40 35 30 25 20 15 10 5 No OfNo Companies 0 Systems Planning Computer Pakistan Management Cooperation UnawareIT on Inadequate IT Systems Employees Non infrastructure Judicious Use of Lack of Proper IT to Investments Lack of Adequate Telecommunication Trained Employees Selection of Proper Selection Management ShirksManagement

Statistically we have framed following hypothesis for this problem; Hypothesis 3(a)

H0: There is no association between a kind of problem and sectors. H1: There is an association between a kind of problem and sectors.

The chi-square (p-value =.932 > 0.05) shows that all the companies have faced these problems while implementing IT with the same proportion. Further, a comparative analysis for all banking sector puts problem 2 (Pakistan inadequate telecommunication structure) at top followed by problem 3, 4, 5. The problems 6, 7 and 8 come next in order. While in manufacturing companies problem 2 is rated at top then comes the problem 3, 4, 6, 8, 5 and 4 next in order. In local companies problem 3 is at top then is problem 1 and 2 and then comes problem 4, 7, 6, 5 and 8. In foreign companies problem 1(lack of adequate trained employees) is at top then are the problem 3,4,5,8 and 7. Figure 7.10 depicts clearly results of all the eight problems for all the companies.

211 In overall comparison of all the companies it was found that out of above eight problems, the Pakistan’s inadequate telecommunication infrastructure (problem 2) has been the major problem in slow IT implementation in the organizations. Lack of IT planning in the companies is the second major problem which is found in the organization. It has been observed that in Pakistan, companies are usually making IT investment by following strategy of other companies not assessing their own real need. Thus some of them are still unable to achieve the desired results. The shortage of trained employees is the third major problem, as most of the institutions in Pakistan are just producing the ‘technicians’ or ‘user’ not the computer experts. The companies are forced to recruit out of these non-qualified personnel, who are unable to properly manage the advanced IT systems. Selection of proper IT systems is the fourth major problem which these companies are facing. More real computer use is also still limited, employee non cooperation, management’s unwillingness to invest more in IT systems, and management unawareness about the IT are also few of the barriers these companies are facing. b) Socio-Culture/organizational/systemic factors The second part of hypothesis 3 focus on the examining the impact of socio- culture/organizational/systemic variables on implementation IT. It views these moderating variables and their impact on both the sectors of economy in our sample i.e. manufacturing and banking. The literature identified a number of factors i.e. culture, human, political, social, governmental, economical etc. which have impact on the implementation of IT. This part of discussion determines to what extent that impact is?.

A scale of 1-4 was used for recording responses of the companies, where 1 means no impact, 2 represents low impact, 3 shows moderate impact and 4 indicates high impacts for a particular variable. For discussion purpose “impact” here is refers to average score greater than 1. Impact of all these variables have been observed for all companies and all sectors. For each variable two different research hypotheses have been tested:

Research Hypothesis No 3(b): “Socio-Culture/organizational/systemic variables such as culture, social, government, political, human, organizational and economical have impact on the implementation of IT in the organizations”. Translation of this in terms of statistical hypotheses is under:

H0: µ = 1

212 H1: µ > 1 This one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. Rejection of the null hypothesis stands for acceptance of the research hypothesis.

Research Hypothesis No.3(bb): “The impact of the given variable on implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. This hypothesis was tested using one way ANOVA technique at level of significance of 0.05. Again, the rejection of the null hypothesis means that the acceptance of the research hypothesis. Rejecting the null hypothesis implies that not all means are same i.e. all means may be different or some may be same or some may be different. The post hoc tests about pair-wise comparison

( H 0 : µi = µ j vs. H1 : µi ≠ µ j fori ≠ j ) were performed using Scheffe test statistic wherever the null hypothesis was rejected. Variable wise analysis is discussed in ensuing sections and the summaries of ANOVA results are presented in Table 7.16.

1. Cultural Factor As discussed in the literature review that each society, nations, industry, corporations and organization, has its own unique culture i.e. set of beliefs, value systems, attitude, and related behavior that shape its personality. Some cultures are more receptive to new technology whiles other are not. Since culture vary more widely across region and organization, so even within same organization one thing which has worked in one area/region, may not work in other. Culture variables, therefore are the most significant factors to be considered in implementing any change/technology. It is hypothesized that; Research Hypothesis No 3(b1): “Culture variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ = 1

H1: µ > 1

213 This one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. In individual sector analysis it is observed that p-value for all organizations is less than .05. It implies that culture has impact on implementation of IT on all the sectors. If we look at all the sectors combined, there has been substantial impact of culture (p<0.05).

Table 7.15 represents summary of all the results of t-test for culture.

Results Summary of One-Sample t-Test Table 7.15 Culture Factor Sector N Meant-statistics p-value All Banking & Manufacturing 48 3.125 21.90 0.000 Banking 24 3.166 16.66 0.000 Manufacturing 24 3.083 14.23 0.000 Local Banks 12 3.333 16.42 0.000 Foreign Banks 12 3.000 9.38 0.000 Local Manufacturing 12 3.166 10.46 0.000 Foreign Manufacturing 12 3.000 9.38 0.000

Research Hypothesis No. 3(bb1): The impact of culture on the implementation of IT is not the same in all the four sectors. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

Oneway ANOVA Results Summary For all factors Table 7.16 For all Companies n=48 ANOVA Results S/no. Variable Name Average Mean F-Value p-value 1 Culture 3.4230 .181 .909 2 Human 2.2292 .207 .891 3 Organizational Problem 2.1458 .600 .618 4 Social Problem 1.4792 5.598 .002 5 Governmental Problem 1.4375 3.644 .020 6 Political Problem 1.6250 6.536 .001 7 Economical 1.5210 3.071 .037

214 The subsequent ANOVA results given in Table 7.16 showed striking similarities that there is significant impact of culture in the implementation of IT and it is same in all the sectors. (F= .181, <2.82 and p-value= 0.909 >0.05). This represents that all the four sectors have been influenced equally with culture variable.

Overall, the above analysis shows that organizational culture has impacted all the organizations in implementation of IT. The management in today’s multinational global business community frequently encounters culture differences, which can impede the successful installation of any new technology.

2. Human Factor It is well established in the literature that individual matters most for economic advances, as well as other natural resources. The human also play a key role in shaping the organizational systems in number of ways. Pakistani organizations are experiencing two types of employee’s influences; 1) by the older employees-reluctant to use new technology and 2) newer employees-more receptive to technology. The banking and manufacturing industries have undergone various restructuring during the last decade and had laid off many old employees to develop a progressive culture in order to bring new changes/technologies. Most of these organizations have been successful in this regards while few are not. It is hypothesized as;

Research Hypothesis No 3(b2): “Human variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ = 1

H1: µ > 1 Again this one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. Turning first to full sample, we note that p-values for all organizations are less than 0.05 which is similar to the p-value of individual sectors. These results tends to support the view that human variable has impact on implementation of IT on all the sectors.

Results Summary of One-Sample t-Test Table 7.17 Human Factor

215 Sector n Meant-statistics p-value All Banking & Manufacturing 48 2.229 09.18 0.000 Banking 24 2.250 16.66 0.000 Manufacturing 24 2.210 14.23 0.000 Local Banks 12 2.333 4.92 0.001 Foreign Banks 12 2.166 3.92 0.001 Local Manufacturing 12 2.333 5.20 0.000 Foreign Manufacturing 12 2.083 4.73 0.000

Research Hypothesis No. 3(bb2): “The impact of human variable on the implementation of IT is not the same in all the four sectors”.

Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

We find in ANOVA results given in Table 7.15 that there is substantial impact of human on the implementation of IT and it is same in all the sectors. (F=0.207 < 2.82 And p-value=0.891 >0.05). This represents that all the four sectors have been affected equally with human variable.

3. Organizational Structural Factor The organizational structure i.e. complexity, formalization, centralization, decentralization etc. has substantial impact on implementation of any new technology. As discussed in the literature organizational structure is an important factor to be considered by the management before implementing any technology as an appropriate ‘structure-fit’ is necessary for adoption of any new technology. It is hypothesized that;

Research Hypothesis No 3(b3): Organizational structure has impact on implementation of IT systems in the given sector. As described above, statistically it implies:

216 H0: µ = 1

H1: µ > 1 To investigate the impact of organizational structure once again this one-sided hypothesis was tested using t-test statistic at level of significance of 0.05. Considering first the individual sector, it is observed that p-value for all organizations is less than .05. That means that the organizational variable has impact on implementation of IT on all the sectors. There has been again impact of organizational structure if we look at the results of all the sectors together (p<0.05). Table 7.18 exhibits summary of all the results of t-test for human variable. Results Summary of One-Sample t-Test Table 7.18 Organizational Factor Sector N Meant-statistics p-value All Banking & Manufacturing 48 2.145 08.21 0.000 Banking 24 2.166 5.45 0.000 Manufacturing 24 2.12 6.12 0.000 Local Banks 12 2.333 4.30 0.001 Foreign Banks 12 2.000 3.32 0.003 Local Manufacturing 12 2.333 5.20 0.000 Foreign Manufacturing 12 1.916 3.53 0.002

Research Hypothesis No. 3(bb3): “The impact of organizational structure variable on the implementation of IT is not the same in all the four sectors”.

Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

The ANOVA results given in Table 7.16 attributes that there is impact of organizational structure in the implementation of IT and it is same in all the sectors. (F=0.600 < 2.82 And p- value=.618 >0.05). This represents that all the four sectors have been affected equally with organizational variable.

217 4. Governmental Factor A major characteristic of all developing countries is all the pervasive and crucial role their governments play in the management of their organizations. In Pakistan too as discussed in literature, like other countries the government has impact on implementation of IT in different ways. It is hypothesized as;

Research Hypothesis No 3(b4): “Governmental variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ = 1

H1: µ > 1 Our t-test statistic results at level of significance of 0.05 show variations for different sectors. For all companies, banks and local banks p-value is <0.05 but for manufacturing (local and foreign) and for foreign banks p-value> 0.05. That implies that in some companies the government polices has impact on implementation of IT and in others it doesn’t. Table 7.19 represents results of t-test for human variable.

Results Summary of One-Sample t-Test Table 7.19 Governmental Factor Sector n Meant-statistics p-value All Banking & Manufacturing 48 1.437 03.57 0.000 Banking 24 1.666 16.66 0.001 Manufacturing 24 1.208 3.39 0.067 Local Banks 12 2.083 3.22 0.004 Foreign Banks 12 1.250 1.91 0.041 Local Manufacturing 12 1.250 1.00 0.169 Foreign Manufacturing 12 1.166 1.48 0.083 Figure 7.11: Schematic diagram for ordered means

Research Hypothesis No.3(bb4): “The impact of governmental variable on the implementation of IT is not the same in all the four sectors”.

218 Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4 H : Sectors 4 3 2 1 1 Means 1.17 1.25 1.25 2.08 At least two µ’s

are different.

The ANOVA results given in Table 7.16 show that there is impact of government in the implementation of IT but it is different in various sectors. (F=3.644 > 2.82 and p-value=.020< 0.05). This represents that all the four sectors have been affected differently with governmental policies. A pair-wise comparison of Schefee test represented in Figure 7.9. It depicted as the highest mean, 2.08 for sector 1(Local Banks), is significantly greater (or different) than all others. That means that government policies have impacted local banks lot but same effect was experience for all other.

5. Social Factor Research Hypothesis No 3(b5): “Social variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ = 1

H1: µ > 1 The results in Table 7.20, p-value < 0.05 for all companies combined, both banking and manufacturing sectors, and local banks and p-value > 0.05 for foreign banks and foreign manufacturing, for t-test statistic (at level of significance of 0.05) indicate that social variable has impacted all the companies except companies operating in foreign sector.

Results Summary of One-Sample t-Test Table 7.20 Social Factor Sector N Meant-statistics p-value All Banking & Manufacturing 48 1.479 04.30 0.000

219 Banking 24 1.750 03.89 0.000 Manufacturing 24 1.208 02.46 0.011 Local Banks 12 2.166 3.92 0.001 Foreign Banks 12 1.333 1.77 0.052 Local Manufacturing 12 1.250 1.91 0.041 Foreign Manufacturing 12 1.166 1.48 0.083

Research Hypothesis No.3(bb5):” The impact of social variable on the implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

The ANOVA results given in Table 7.16 show that there is substantial impact of social variable in the implementation of IT but it is different in various sectors. (F=5.598 > 2.82 and p- value=.002< 0.05). This represents that all the four sectors have been affected differently with social variable. Scheffe test also shows that sector 1 is different then sector 2, 3 and 4 and vice versa.

Sectors 4 3 2 1 Means 1.17 1.25 1.33 2.17

Figure 7.12: Schematic diagram for ordered means

The highest mean, 2.17 for sector 1, is significantly greater (or different) than means 1.25 for sector 3 and 1.17 for sector 4. The mean 1.25 for sector 3 is different than 1.17 of sector 4.

6. Political Factor Research Hypothesis No 3(b6): “Political variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ = 1

220 H1: µ > 1

The results in Table 7.21 indicate that p-value for all the companies combine, both banking and manufacturing sectors, local and foreign banks, local and foreign manufacturing is < 0.05 for t- test statistic (at level of significance of 0.05). It indicates that political variable has impact on all the companies.

Results Summary of One-Sample t-Test Table 7.21 Socio-Culture Variable-Political Sector N Meant-statistics p-value All Banking & Manufacturing 48 1.646 05.34 0.000 Banking 24 2.250 16.66 0.000 Manufacturing 24 1.916 14.23 0.002 Local Banks 12 2.416 04.53 0.000 Foreign Banks 12 1.416 02.16 0.009 Local Manufacturing 12 1.416 5.20 0.027 Foreign Manufacturing 12 1.333 4.73 0.019

Research Hypothesis No.3(bb6): “The impact of political variable on the implementation of IT is not the same in all the four sectors”.

Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different.

The ANOVA results exhibit in Table 7.16 display that There is substantial impact of political variable in the implementation of IT but it is different in various sectors. (F=6.536 > 2.82 And p-value=.001< 0.05). This represents that all the four sectors have been effected differently with social variable. Scheffe test shows the same that sector 1 is different than 3 and 4. Sector 2 is different then 4.

221

Sectors 4 3 2 1 Means 1.25 1.42 1.42 2.42

Figure 7.13 : Schematic diagram for ordered means

The highest mean, 2.42 for sector 1, is significantly greater (or different) than means 1.42 for sector 3 and 1.25 for sector 1. The mean 1.42 for sector 3 is significantly greater than mean 1.25 for sector 4.

Political factor has the substantial impact on implementation of IT. This impact is seen on high end in banking as a whole and in local banks particular and it could be due the reasons that there has been lot of political intervention in these banks till their complete privatization by 2003.

7. Economic Factor Research Hypothesis No 3(b7): “Economic variable has impact on implementation of IT systems in the given sector”. As described above, statistically it implies:

H0: µ=1

H1: µ>1 In Table 7.22, we give results of t-test statistic at level of significance of 0.05, which represents that p-value for all the companies combine, both banking and manufacturing sectors, local and foreign banks and local manufacturing is <0.05. Only for foreign manufacturing it is >0.05. It shows that economical variable has impacted all the companies except foreign manufacturing.

Results Summary of One-Sample t-Test Table 7.22 Economic Factor Sector n Meant-statistics p-value All Banking & Manufacturing 48 1.520 04.12 0.000 Banking 24 1.791 03.65 0.001 Manufacturing 24 1.250 02.30 0.015 Local Banks 12 2.083 03.22 0.004

222 Foreign Banks 12 1.500 01.91 0.041 Local Manufacturing 12 1.416 02.16 0.027 Foreign Manufacturing 12 1.083 01.00 0.169

Research Hypothesis No.3(bb7): “The impact of economic variable on the implementation of IT is not the same in all the four sectors”. Translation of this in terms of statistical hypotheses is follows:

H0: µ1 = µ2 = µ3 = µ4

H1: At least two µ’s are different. The ANOVA results given in Table 7.16 exhibits that there is impact of social variable in the implementation of IT but it is different in various sectors. (F=3.071 > 2.82 and p-value= 0.037< 0.05). This represents that all the four sectors have been affected differently with social variable. From Scheffe test it is observed that sector 4 is different then all other sectors.

Sectors 4 3 2 1 Means 1.08 1.42 1.50 2.08

Figure 7.14: Schematic diagram for ordered means

The highest mean, 2.08 for sector 1, is significantly greater (or different) than mean 1.42 for sector 3 and 1.42 for sector 3. The mean 1.50 for sector 2 is significantly greater than mean 1.08 for sector 4.

In summary like other variables, economic conditions have effected all the organizations except foreign manufacturing in implementation of IT. As discussed in the literature Pakistan has mixed economy with protective interventionist policies where the private sector is allowed to operate under governmental guidelines and direct control, and where the government also owns and manages manufacturing and service industries. In the above analysis the local companies are affected more than foreign companies with economic variable because of the reasons that these companies have been more under economic influence/reforms of the government. The foreign companies are comparatively less effected to economic changes/reforms than that of other companies operating in Pakistan.

223

Overall Conclusion Hypothesis 3 7.5.1 Pakistan is a developing country and is now on IT boom. There are obvious changes occurring in the organizational systems in the recent years due to IT. But still there are lot of barriers which have direct impact on successful implementation of IT. The organizational decisions are effected by different factors. The above discussion has shown that out of eight problems as identified in the literature, Pakistan inadequate telecomm infrastructure, lack of IT planning, lack of trained employees and improper IT systems are the top most problems these organizations are facing. Other factors like culture, human, political, organizational, economical, social etc. have also impacted the performance of these organizations at the same time.

Hypothesis 4 7.6.0 The literature has discussed many problems in adoption / implementation of IT in the organizations and management actions to overcome these problems. In hypothesis no 3, we have analyzed individual problem in detail. In the ensuing hypotheses we analyze different actions of management to overcome these problems. Statistically, it implies that;

Research Hypothesis no 4. “The organizations take same measures to overcome IT adoption problems”.

We frame two hypotheses for testing.

H0= The organizations take same measures to overcome IT adoption problems. H1= The organizations take different measures to overcome IT adoption problems.

Responses of different managers were recorded in the form of ‘yes’ or ‘no’ answers on the questionnaire and then these answers were dummy coded with 1 for ‘yes’ and 0 for ‘no’ for analysis purpose. z-Test and chi-square test were applied for analysis. Results of analysis are discussed as under, values for chi-square are given in Table 7.14 and values for individual z-test are given Table 7.23. Detail is presented in Annexure XXIV. in different tables in undergoing discussions. The ensuing discussions seek to investigate “different measures and which one is

224 more used in organizations to overcome IT implementation/usages problems internal to organizations”. The measures tested are;

1) Education & tanning 2) Employees motivation 3) Employees rewards 4) Job threats.

It is statistically hypothesized as; Research Hypothesis No.4(a1): “Most of the companies adopt the given ‘measure’ to control IT adoption problems in their organization”.

This hypothesis was tested for each of the measure using z-test using a level of significance as 0.05. These hypotheses were statistically tested in the form given below: H :π ≤ 0.50 0 H1 :π > 0.50 where π stands for the proportion of organizations in favor of given proposition. This hypothesis was tested using z test statistic separately for each of the given ‘reason’ and has been discussed below.

1. Education and Training: H0 was rejected for all sectors and overall in above hypothesis ( p=0 <0.05) Table 7.23. All organizations feel that ‘education and training’ is the most useful measure, the organization takes to overcome IT adoption problems.

2. Employees Motivations: H0 was again rejected for all sectors and overall as all the organizations feel that ‘employee motivation’ is also the most useful measure taken in the organization to overcome IT adoption problems. (P=0<0.05) Table 7.23.

3. Proper Rewards to users: The Table 7.23 below exhibits variations in p-vales for this variable. Overall all the companies, all banking and manufacturing, and foreign manufacturing are having p-value < 0.05. However, for local banks and local manufacturing p-value>0.05. It

225 implies that all the organizations in sample, except local organizations believe that ‘proper rewards’ system in addition to above cited two measures to overcome IT adoption problems is necessary. The local companies lack this measure because of the reasons that their management is normally having conservative and hard approach in compensating employees on their certain achievements. Though management is very open to new IT introduction/investments but their employees are still dissatisfied with their salaries and other reward systems.

Results Summary of One-Sample z -Test Table 7.23 Measure to Overcome IT Adoption

Sector n Education and Employees Proper Job Threat Training Motivation Rewards to Users p- value p- value p- value p- value All Banking & Manufacturing 48 0.000 0.000 0.000 1.000 Banking Sector 24 0.000 0.000 0.000 0.999 Manufacturing Sector 24 0.000 0.000 0.000 1.000 Local Banks 12 0.000 0.000 0.060 0.959 Foreign Banks 12 0.000 0.000 0.000 0.994 Local Manufacturing 12 0.001 0.001 0.052 0.993 Foreign Manufacturing 12 0.000 0.000 0.000 1.000

4. Job Threats Table 7.23 above exhibits that p-values in overall all the companies, all banking and manufacturing sectors, and individual sector are grater than 0.05. It implies that ‘job threats’ is least used measure in almost all the organizations in sample and it supports our null hypothesis.

Research hypothesis No.5(a2): “There is association between ‘measures’ and different sectors i.e. different sectors are having different measures for overcoming IT adoption problems”. This hypothesis was tested using chi square test of association for nominal data at 0.05 level of significance. It is observed from chi-square analysis p-value=.751 >0.05. It shows that the companies take different measures in all four sectors with same proportion to overcome IT adoption problem. Moreover, in comparative analysis of all the companies(Figure 7.15), out of 4 above mentioned measures, education & training and employees motivation measures are seemed to be used mostly in all organizations as they are toped scored i.e. 48 out of 48 in calculations of sums. The employee reward is next high scored measure with 25 score. The job threat with 6 score is the 4th and least used measure. In comparison of Banking Vs

226 Manufacturing sectors, more or less same results are found and same are the results when comparison is made between local Vs foreign companies. There is only one variation in that, that in local companies ‘job threat’ is used more than the foreign companies as it is having 5 score in local and 1 in foreign company. Figure 7.15

Measures to Overcome IT adoption Problems: All Companies

60 50 40 30 20 10

No Of Companies Of No 0 Education & Training & Rewards Motivation Threat Job Employees Employees

On the whole, we conclude that in all organizations education and training, employee’s motivation and rewards are the most used and ‘job threat’ is the least used option to overcome employees’ resistance problems. It is a fact that the organizations face many barriers in adoption of any new IT systems and of course they use many measures to overcome them. It is revealed in this study that organizations usually take different traditional measure like employees’ education & training, motivation, rewards etc. to overcome IT implementation obstacles which impede its success. But despite this, there remain several other challenges that the management must resolve to make IT more successful. So based upon above discussions we accept our research hypothesis.

Hypothesis 5

7.7.0 The literature has identified that top management commitment, involvement and support can be considered as the foundation stone of IT success, in turn affecting the activities of the IT function, and the development of IT’s fortune within the organizations. However, that commitment and involvement are more useful when accompanied by a genuine planning, investment and government backup for IT usage. It is hypothesized;

227 Hypothesis No. 5: “Al the organizations have same reasons for so far IT success”. Statistically it implies that;

H0: All the organizations have same reasons for IT success

H1: All the organizations have different reasons for IT success

To test the above-mentioned hypothesis responses of different managers were recorded in the form of ‘yes’ or ‘no’ answers on the questionnaire and then these answers were dummy coded with 1 for ‘yes’ and 0 for ‘no’ for analysis purpose. z-Test and chi-square test were applied for analysis. Results of analysis are discussed as under, values for chi-square are given in Table 7.14 and values for individual z-test are given in Table 7.27. The detail of z-Test is reported in Annexure XXVII. The frequencies of each reason and measure are given in Annexure XX for comparative analysis. In this analysis it is tested that “what are the most accepted reasons out of following due to which IT is successful so far in organizations?” The reasons tested are;

1. Top Management commitment 2. Organization’s proper IT planning 3. Organizations proper IT investments 4. Government Role. Statistically it is further hypothesized that:

Research Hypothesis No.5(a1): “Most of the companies cite the given ‘reason’ as a cause of success of IT in their organization”. These hypotheses were tested for each of the reasons using z-test using a level of significance as 0.05. These hypotheses were statistically tested in the form given below: H :π ≤ 0.50 0 H1 :π > 0.50 where π stands for the proportion of organizations in favor of given proposition. This hypothesis was tested using z test statistic separately for each of the given ‘reason’ and has been discussed below.

1. Top Management Commitment: In the above hypothesis H0 was rejected for all sectors and overall. It implies that more than 50% of the organizations feel that ‘top Management

228 Commitment’ is reason for IT success in their organization since all p-values are smaller than 0.05 (Table 7.24). Results Summary of One-Sample z -Test Table 7.24 IT Success Reason

Sector n Top Management Organization Organization Govern commitment Proper IT Proper IT ment Planning Investment Suport p- value p- value p- value p- value All Banking & Manufacturing 48 0.000 0.000 0.000 0.000 Banking sector 24 0.000 0.000 0.005 0.213 Local Banks 24 0.000 0.000 0.000 0.000 Foreign Banks 12 0.000 0.000 0.133 0.500 Manufacturing Sector 12 0.000 0.000 0.006 0.133 Local Manufacturing 12 0.001 0.001 0.006 0.000 Foreign Manufacturing 12 0.000 0.000 0.006 0.000

2. Organizational proper IT planning: Again H0 was rejected in above hypothesis for all sectors and overall. It indicates that more than 50% of the organizations feel that ‘proper IT planning’ is reason for IT success in their organization. As shown in Table 7.24, all p-values except local banks, are smaller than 0.05. Respondents in local banking sector admitted that IT is being applied haphazardly without any rational in their respective organizations, resulting therein high increase in expenses and rapid obsolete of core IT systems/applications.

3. Organizational proper IT Investments: The Table 7.24 shows variations in p- values for this reason. Overall, all the companies, manufacturing sector, local and foreign manufacturing are having p-value <0.05 rejecting H0. However, for banking sector in local and foreign banks p-value>0.05. Table 7.24 display frequency of the sums of IT investments trends of all organizations and Figure 7.16 also clearly depicts these results.

Since in overall organizations p-value<0.05, so we accept alternate hypothesis of presence of relationship. Figure 7.16

229 IT Investment Trends 37 36 s 35 34 33 32 31 30 29 No Of Companie 28 27 IT IT Strategic IT Investments Threshold IT Investments Informational Investments Investments Transactional

4. Government Support: Table 7.24 also indicates results for this reason. Overall, majority of the organizations feel that their IT systems have not been successful because of government support. (H0 was accepted with p-value for all organizations, banks, manufacturing, local and foreign banks, local and foreign manufacturing grater than 0.05. The same finding have been observed earlier.

Table 7.25 IT Investments Trends: Sector Wise Transactiona Informationa Total of Strategic IT Threshold IT S/No. Sector l IT l IT each Investments Investments Investments Investments sector 1 Local Banks 9 8 11 10 34 2 Foreign Banks 7 9 9 9 30 3 Local Manufacturing 10 7 6 9 33 Foreign 4 Manufacturing 6 6 9 8 30 Sum of all Sectors 32 30 35 36 127

All the organizations are seemed to be dissatisfied with government role to boots IT system and need it to play more vibrant role as regulator to uplift country’s IT.

Research Hypothesis No.5(a2): There is association between ‘reasons’ and different sectors i.e. different sectors are having different reasons for success.

This hypothesis was tested using chi square test of association for nominal data at 0.05 level of significance.

230 It is observed from our chi-square test that there is no association between the reasons and the sectors as p-value= 0.983 > 0.05. It implies that the given reasons were cited with the same proportion by different sectors. Figure 7.17

Reasons Organizations think for their IT success: All Companies

50 45 40 35 30 25 20 15 10

No Of Companies No Of 5 0 Role Top Proper Planning Proper IT Proper Government Investments Management Commitment Organizations Organizations

In addition, a comparative analysis of all the companies based upon the calculated frequencies (Figure 7.17) puts “Top Management Commitment” at top followed by proper IT planning, proper IT investments and government role having scores of 47, 36, 35 and 14 respectively. In comparison of banking versus manufacturing sectors, it is found that in entire banking sector all companies uniformly believe that their IT success is due to their top management firm commitment for IT implementation while in manufacturing companies the score for management commitment is 23. About IT planning, 15 banking organizations believe that their IT projects are well planned, while in manufacturing 21 organizations feel that they have proper planning. About IT proper investments 13 companies believe in banking sector that they have made proper investments so far while in manufacturing sector the number of companies are 17. About government role only 5 out of 24 banks and 9 out of 24 manufacturing companies have appreciated government role. If we compare local organizations Vs foreign organizations, in local organizations again all 24 companies and in foreign 23 companies have appreciated top management commitment. While for IT planning 18 local companies and 20 foreign companies believe that their projects are well planned. Regarding IT investments 14 local companies and 22 foreign companies commended their company’s investments. About government role 8 local and 6 foreign companies have appreciated government role.

231 It is concluded therefore, that almost in all the companies in sample, there are different reasons for IT success. Overall in all the organizations top management support is considered to be success of any system.

Hypothesis 6 7.8.0 It is identified in the literature that in view of the impact of the modern organizational setup, user function, information literacy, miraculous advancement in technology and above all a full involvement of user and its training is the core to success of any organization. It is hypothesized as;

Research Hypothesis No 6: “Training and user involvement in IT projects of organizations have great impacts on the performance of the organization and all companies give importance to them”.

It is observed in the surveys of all companies in sample that every company gives much and equal importance to the involvement of user in the development/installation of a new system and its training. All companies consider both of these factors important for their success. In almost all of the companies’ steering committee comprising of senior heads of different departments make major IT systems installation decisions. An appropriate budget is allocated to the training of the employees in each company. The identical ‘yes’ response of all the companies with regards to test this hypothesis with the following statement “Do you involve user in IT system development and do you give training to them for IT systems”, points to the facts that the user involvement and training is being given ‘much importance’ for all. Therefore, no statistical analysis is made for any test and the research hypothesis no 7 is accepted as such.

Overall Conclusions 7.14.0 For this study six hypotheses were framed to test different research questions. Each hypothesis tested a number of variables. According to results of data analysis sufficient support was found for all research hypotheses. The first two hypotheses addressed issues related to impact of Information Technology on management performance, while next one identified the IT

232 adoption barriers and last four hypotheses dealt with the problems companies usually face in implementing IT, reasons to overcome these problems, IT so far success reasons, and importance of user involvement and its training for IT project success. All of these issues were seen to be more critical because of many reasons. Therefore, real data from the companies in sample is obtained and utilized in various statistical techniques by using SPSS and Minitab computer packages. The study has resulted into a number of important issues. As, in the 1st hypothesis it is observed that IT investment has positive impact on performance of all the organizations in sample but performance of banking sector, particularly local banks, is much betters then the manufacturing sectors’ performance. Moreover, IT expenses for all the companies and local banks in particular have increased tremendously during the last five years.

233 There can be several reasons for these increasing trends in the IT expenditures. Firstly, there was no proper recognition of the importance of IT at government level till 1990s. The government has started playing its role more aggressively in creating IT’s awareness and encouraging its use in the country for the last 4-5 years. It has also reduced import duties and sales tax on IT items which in turns substantially lowered down prices of IT products, enabling companies to buy and introduce new IT in every functional area more freely. Secondly, reduction in communication charges by PTCL as well as availability of state-of-the-art world standard IT infrastructure with latest communication channels i.e. DSL, VSAT, Radio link etc. is a great attraction for the companies to replace their old hardware and software.

Most of the companies are now upgrading their existing infrastructure to make it in line with world standards. Thirdly, due to revised and strong economic polices of the government, most of the multinationals that were previously working with low profile have started expansion of services or diversification of products. Therefore, to support this they have started investing more in their IT set up in the recent past. Conversely, to stay abreast of competition, the local companies are also improving their IT setup by investing more in it. The last plausible reason for incremental investments in IT by these companies during the recent years is the availability of new and modern computer systems/IT products in the market, which were not available few years back. So, aforementioned initiatives seem to have compelled all companies to introduce modern technologies in their work to earn more profits, thereby increasing IT expenses.

Similarly, the findings of the 2nd hypothesis revealed that the performance of the management does not depend on the functions of IT, type of hardware/software is being used in the Pakistani organizations but it does depend on information systems level. Though use of standard applications packages and ERP system conceptually and operationally are getting popularity in the world and in Pakistan too, but still in Pakistan, most of the companies are relying on in-house developed IT systems. It is also revealed that manufacturing sector companies are converting their IT systems more rapidly to ERP solutions than the banking sector companies and overall foreign companies are taking the lead.

234 The 3rd hypothesis proved that the organizations though face many barriers in the way of implementing of IT but Pakistan’s inadequate telecom infrastructure, lack of planning, lack of trained employees, improper IT systems are the top most problems faced by these companies. Government’s uncertain rules/regulations and its’ polices to create IT based economy had been bureaucratic in past. Though the government has liberalized its IT polices during the last 4-5 years but still there is lot to be done to remove present hindrances to boost IT. Many IT facilities including creating of communication links via DSL, Radio link, VSAT are still not available in many of the cities of Pakistan, thereby, creating major problem in the real time, on-line connectivity of various organizations for full fledge e-Commerce. The systems used are selected without assessing the actual need. These are either acquired by copying other companies’ strategies or purchased on recommendations of the computer vendors. In addition traditional problems like culture, human, organizational being at top and economical, political and social problems after that, also impeded the IT diffusion in the organizations.

The 4th hypothesis confirmed that out of many actions/measures which organizations take to overcome IT adoption/implementation problems, education & training, employee’s motivation and rewards are found to be the top most used measure. The 5th hypothesis perceived top management commitment to be the most accepted reason for, so far, IT success in all the organizations. The top management is now very active, it is not merely symbolic but giving all go-aheads for IT implementation by providing different resources and leadership, by setting goals and objective for IT and showing interest by participating in IT deployment matters. It is fully committed to implement IT. They have realized the value IT can give to their organization. IT is heavily being pushed from top management to get its maximum benefits. IT could become more successful and beneficial with continued top management support in all companies and particularly in those where there is proper planning and investment in IT systems. The government more support in setting up proper IT infrastructure could add a lot to all its benefits. Proper IT planning and investments are found missing in the organizations. There is also no proper categorization of IT investments in the companies. In addition most of the investments in all the sector and banking in particular, are found to be made for ‘threshold IT(Just to compete) investments without any accounting rational Table 7.25.

235 Though it is observed in first hypothesis of this study, that banking sector surpass manufacturing sector in IT performance, but it is reveled here that banking sector at the same time lacks proper investments in right areas as compare to manufacturing sector. It is bore out to the facts that the banks like M.C.B, H.B.L, Union, Faisal are changing their costly core IT systems after short span of time i.e. in just 2-3 year, citing the reasons that old systems do not fulfill their need. They are bearing billions of rupees as an expense for this replacement to increase efficiency. These increased expenses would have been reduced, if the need of the IT systems had rightly identified and then ‘proper investments with proper planning’ in the right areas had been made. It can be said therefore, that the banking sector can get much better results with low cost if more attention is given to properly investments.

It has been observed that generally there is no proper categorization of these investments in both the sectors. This was confirmed when companies were asked about one of the following purposes of their IT investments; 1) traditional(cutting costs), 2) strategic (competitive advantage), 3) informational (information access & communication) and 4) threshold IT(Just to compete). It revealed in surveys that most of the managers have no idea of this categorization of purpose of IT investments. However, it has been noticed through response of some manager that firms are investing more in ‘threshold IT’ and are not unduly concerned about weather the investment has a positive return. IT is their necessity now, regardless of the accounting rational, in order to imitate competitor’s technology level.

The 6th hypothesis has identified user involvement and his training as an important aspect in implementation of IT in all the sectors. All the organizations are much aware of it and are emphasizing on it lot in all their future planning.

All in all, this study concludes that IT has been applied throughout all areas of both manufacturing and banking industries efficiently and it has positive impact on the performance of all the organization. The study has dealt with different issues from several perspectives. Although all the companies are having same issues but significant differences exist between them with regards to their IT investments and benefits. The pattern of similarities between banking and manufacturing tends to support this notion that both the sectors now are best IT

236 user. The banking sector however surpass manufacturing sector in performance with full user involvement, its motivation, education and training and full top management commitment. More over this performance is independent of IT systems and types of hardware/software being used but dependant on IT systems levels. The research also found that all the organizations have been facing various problems in IT adoption and these were same in all the sectors.

In addition to other problems Pakistan’s inadequate telecom infrastructure is the top problem of all the sectors. It is indeed challenging for the companies to overcome all these problems. At the same time, taken together, the results of this study also reveled that all the organizations take same measure to overcome IT adoption problems using motivation and reward as most used strategies. The unique results of this study indicates that generally, there is lack of proper planning and investments in IT projects and mostly ‘threshold IT-Just to compete’ investments are being made in the companies. Similar to the world, in Pakistan too, the use of standard application packages is being increased but at the movement organizations with in-house developed systems are performing well.

237 References:

Bakry Ali Haj and Bakry Saad Haj(2005), “Enterprise Resource Planning: A review and a stop view”, International Journal of network management; 15: 363-370.

Davis, F.D (1989), “Perceived usefulness perceived ease of use and user acceptance of information technology”, MIS Quarterly, no 13, pp-983-1003.

Davis, F.D, Bagozzi, R.P, Warshaw, P.R(1992), “ User acceptance of computer technology: a comparison of two theoretical models”, Management Sciences, Vol, 35 pp.98,1003.

Fink Arlene(2005), “Conducting Research Literature Review”, 2nd edition, Sage Publications, Inc., U.K. pp51-148.

Gravetter Frederick J & Wallnau Larry B(2000), “Statistics for Behavioral Sciences”, 5th edition, Wadsworth/Thomson Learning U.S.A. pp 581, 313, 150, 395

Kothari C.R(2004), “Research methodology-Methods & Techniques”, 2nd Edition, New Age International Ltd. Publisher, New Dehli, India. Pp1-23, 34-35,95-121.

Neuman W. Lawrence(1999), “Social Research Methods, Qualitative and Quantitative Approaches”, 3rd edition., U.S.A. Allyn & Bacon Publisher.

Reddy R, Jayaprakash(2004), “Research Methodology”, A. P.H Publishing Corporation New Dehli, India.pp 11-16.

Somekh Bridget & Lewin Cathy(2005), “Research Methods in the Social Sciences”, Vistaar Publications, New Dehli, India. pp197-236.

Willing, C.(2001) “Introducing Qualitative Research in Psychology: Adventures in Theory and Methods”, Philadelphia: Open University Press.

Zikmund, W.G(2000) “Exploring Marketing Research”, 7th edition, U.S.A, Thomson Learning.

238 Chapter

8 Findings, Conclusions And Recommendations

General 8.01 This chapter presents the overall findings/conclusions and recommendations based on the literature review and the survey. This chapter is divided into two sections. The first section contains the conclusions while the second section presents the researchers’ recommendations. An overall conclusion is given at the end of the chapter.

Major Findings 8.1.0 The literature review established that Information Technology plays an important role in growth and uplift of today’s organizations and a country’s development. IT is a major source of change and revolution in the working of organizations now a day. IT is becoming cheaper and better at an exponential rate. The developing countries like Pakistan have been relying most on the IT which has been developed by the advanced countries. The success of any technology is dependant upon its proper diffusion which is most decisional, crucial and costly stage, so is case with IT. Besides a supportive infrastructure, user perception, attitude and interaction play an important role in the adoption process. The adoption process for any technology requires fullest involvement and acceptance of the user. IT is more user-oriented and needs to be deployed by offering different incentives, rewards, recognition and moral supports to its actual user with fullest top management support. IT is a technology of time, therefore, its acquisition and diffusion has now been the focal point of nations’ agenda of all the developing countries and catching the attention of both the private and public companies.

It was also established in the literature that IT is the important management tool. It occupies a key role in modern science and technology. It is having a pervasive impact on virtually every sphere of life and is having great presence in all industries, in service, as well as, in manufacturing. IT is being used in all functional areas of the organizations to increase their

240 performance and it is now playing more important role in the organizations than labor and capital do. Over the time the use of IT has increased rapidly in all the organizations.

The literature review also showed that the benefits of IT and its advancement in hardware and software have compelled the companies to utilize it in all their functional areas. The successful IT introduction in the organizations has saved time and money, increased revenue and market share, interlinked several functions and units, improved organizations’ performance by eliminating delay, reduced administrative intermediaries and redundant processing steps by providing better access to information, improved decision making etc. The organizations use the ability of IT to achieve new goals and processes and perform the things that are not already done. IT is used for organization’s reengineering, innovation, organization’s transformation and as a strategic weapon for social and economic changes.

The advances in IT have significantly influenced the radical change of the twentieth century. IT has permitted the firms to become more efficient, more effective, more flexible, and economically more powerful in ways once impossible but all IT benefits are dependent upon the way the management deploy it in the organizations. An industry using IT will have to consider that how much, when and where to make IT investments to get better performance. They also have to consider that what type of hardware, software, personnel and information systems they are using. Proper training and involvement of the user in IT projects were also found to have great impact on IT success to increase the management performance. An appropriate IT investment decision, selection of the appropriate hardware, software, personnel and systems’ type involve an intelligent decision making, and subsequently, the success of the entire set of management processes.

In the literature review it was also established that many organizational and systemic factors may impede the adoption of IT. Important among these are culture, social, political, governmental, economical, individual, structural, lack of coordination among different departments, lack of proper infrastructure, lack of management support, and lack of finances etc. The success of any technology depends on right/effective use of these factors and aligning these factors with new strategic technology adoption decisions is a complex process that requires a complete

241 understanding of all aspects of these factors. Therefore, there is a great desire of proper management of technologies as per specific need, culture and environment of any organization and country. If a country or company simply trying to follow another country’s or company’s adoption model, it is not likely to work very well at all. It needs to adopt any particular technology according to its own environment, culture, conditions, need and requirements. Barriers to adoption and diffusion of technology depend on the particular technology adopted. Although barriers to take-up and spread of IT are similar for the use of each level of IT but there can be significant differences in emphasis. The size of these barriers differs across countries and organizations. Longer these barriers are, the greater the investments and efforts organization has to make to adopt and use IT. A suitable culture, social acceptance by the employees, favoring governmental, political and economic conditions were found to be important factors for success of IT and failing to put proper dimensions of these factors can inhibit the success and may increase the risks of failure. The proper management of technology as per specific culture, political, social requirement of the organization can make any technology a success.

It is revealed in the literature that IT has proven to be the key technology of the past two decades. Over last one decade it has developed at a breakneck speed and has brought tremendous opportunities for mankind globally. In Pakistan IT is comparatively a recent arrival but it is progressing smoothly. IT has been introduced in every discipline now. Newer and IT friendly methods are being acquired to keep people abreast of the latest information about the innovation and inventions going on around global efforts. The growth in Pakistan IT industry has been unleashed in the past years. Almost every organization working in Pakistan is using IT for its tasks. The government of Pakistan has laid great emphasis on enlarging the scope and intensity of IT in variant areas. IT has got massive attention from the present government. The government has liberalized its rules and offering different incentives to boost up IT usage through comprehensive policies regarding IT, telecom deregulation, cellular mobile and broadband. These policies have given strategies direct and set objectives for improvements of Information and Communication Technology in the country. Pakistan places science and technology among its top concern with particular focus on IT and telecom and these areas have shown tremendous growth. Though introduction of IT in Pakistan was started in 1960 but its widespread diffusion has started during the last few years. Maximum attention has been focused

242 on development of IT infrastructure at all levels. IT infrastructure and services across the country are fairly well established and Pakistan has state-of-the-art telecommunication network comprising of digital switching, transmission, radio and fiber optic cables and other modern technologies. Pakistan no more remains a silent observer to the spiraling growth of the IT but is a true user of all its latest tools and techniques. The IT industry in Pakistan has not yet achieved sufficient maturity for it to serve its needs and to face severe competition in the international market. The IT hardware industry is facing death while its counterpart-the software industry is flourishing. The Pakistan is still relying on computer hardware, most of which is imported from developed countries. But Pakistan's IT software industry has everything one may need, experts from various disciplines, highly skilled and economical workforce, a modern and rapidly expanding telecommunication system, all this is backed by an unmatched investment package offered by the Government of Pakistan. The government is building IT skills by liberalizing its laws for establishing IT institution. These institutions are needed to be monitored carefully for quality education, to produce world class IT experts.

The government is taking all possible steps to institutionalize the traditions of IT in all sectors in the country. The government’s policies with respect to E-Commerce and Internet business are fairly well and it is because of them that Pakistan has now emerged as one of the most technological enhanced nation in the region. In a very small span of time the government has managed to turn around the economy to make its base more along the lines of technology oriented industry rather than conventional industries of yore.

In addition to other organizations banking & manufacturing industries of Pakistan are also using IT since ages in almost all of their applications. It has been established that IT investments have positive impact on organizational performance of both the industries. IT has become means of better production and services in these industries. The literature review also established that in banking IT is being used mostly for customer oriented applications and the banking industry seems to be more benefited with IT than that of manufacturing. At the same time ATMs and other on-line facilities offered through IT have raised the important serious issues of security, authentication, consumer protection, privacy and integration of data. This includes issues relating to confidentially of information, preventing of data corruption and prevention of fraud. Many

243 organizations are using appropriate technologies for encryption of data for secured transaction, regular and multiple backups, extensive use of password and other forms of authorization to have security. There is a lack of standardization in the software being used in the industries. The expenditures on IT are seemed more than the benefits being received. The exponential growth of the IT industry in Pakistan, with a rising number of software packages has necessitated the need for interaction between the government IT policy makers and the IT usage organizations for standardization. The organizations may get strategic business benefit in term of high corporate image higher business orders, faster payments, better customer value and increased employees commitments but financial benefits in term of cost savings are not achieved.

The survey of the banking and manufacturing industries of Pakistan has revealed that IT is being applied successfully in all areas of both the sectors and they are achieving many benefits. Predominantly the major benefits achieved across both the industries are, increase in incomes, customer image, stakeholders’ confidence, interoffice links, employees’ commitments etc. Overall, it is found that the IT has positive impact on organizational performance of all the organizations but performance of banking sector, particularly local banks, has been much better than the manufacturing sectors in Pakistan. Moreover, IT expenses for all the companies and for local banks in particular have increased tremendously during the last five years. It is also revealed that the performance of all IT based organizations does not depend on the functions of IT, type of hardware/software but it does depend on information systems level. Though use of standard applications packages and ERP system conceptually and operationally are getting popularity in the world and in Pakistan too, but still in Pakistan, most of the companies are relying on in-house developed IT systems and are performing well.

It is identified that the organizations though face many barriers in the way of implementing of IT but Pakistan’s inadequate telecom infrastructure, lack of planning, lack of trained employees, improper IT systems were identified as the greatest impediments to IT success in both the industries. In addition socio-culture/organizational/systemic problems like culture, human, organizational being at top and economical, political and social problems after that, also impeded the IT diffusion in the organizations. It is also observed that out of many actions/measures which organizations took to overcome IT adoption/implementation problems with regards to the

244 employee’s resistance, the measures like education & training, employee’s motivation and rewards were found to be at top. Above all, the top management commitment was found to be the most accepted reason for, so far, IT success in all the organizations. At the same time proper IT planning and investments were found missing in the organizations. There is also no proper categorization of IT investments in the companies. Most of the investments in all the sectors, are found to be made for threshold IT(Just to compete) investments without any accounting rational. The user involvement and its training were found to be an important aspect in implementation of IT in all the sectors on which all the organizations are much aware and emphasizing a lot in all their future planning.

All in all, it is found that IT has been applied throughout all areas of both manufacturing and banking industries efficiently in Pakistan and it has positive impact on the performance of all the organization. Although all the companies have been facing same problems in IT adoption but significant differences exist among them with regards to their IT investments and benefits. The pattern of similarities between banking and manufacturing tends to support this notion that both the sectors are best IT user but banking sector surpass manufacturing sector in performance with full user involvement, motivation, education and training and full top management commitment. Moreover, this performance is independent of IT systems and types of hardware/software being used but dependant of IT systems levels.

Recommendations 8.2.0 The importance of IT is represented by the amount of research in the literature review and survey in this study. Based upon the overall results of this study, the following policy recommendations for improvement of IT utilizations for Pakistani banking and manufacturing sectors are made;

1. The banking and manufacturing sectors in Pakistan are showing signs of robust growth after the extensive reforms undergone during the past decades. The introduction of structural reforms in the Pakistani banks in 1974 and 1992 and in manufacturing sector in 1974, 1980 and 1989 were, by far, an important milestone in the economics management of the country. Though both, but banking sector in

245 particular, was in the vanguard in this reform process. Coupled with, by implementing IT both sectors are receiving high operating benefits. However, the cost of IT utilization has been very high in both the sectors. As it revealed in our analysis that IT investments have been increased in banking sector as a whole and there is high rise in IT investments in local baking sector in the latest IT systems in the recent years as compared to foreign banking sectors. The local banking sector of Pakistan is using IT more discreetly than the foreign banks. As percentage of IT expenses for the years 1999-2004 for total banking sector, are 76.33%, out of their total IT expenses for the years 1990-2004. The percentage increase in IT expenses in local banks is 82.53% for the year 1999-2004 out of expenses of the years 1990-2004, which is much higher than the foreign banks where %age increase is 61.20%. There is also increase in cost in manufacturing sector but in comparison of local versus foreign manufacturing companies mixed trends have been observed in IT spending. The IT expenses percentage is 69.17% and 56% respectively for both the sectors out of incomes of years 1990-2004. But surprisingly, percentage IT expense for local and foreign companies for the years 1990-2004 as a whole are 29.73% and 42.33%. It is, therefore, evident that overall foreign manufacturing sector is investing more in IT than the local manufacturing sector. Overall, there is remarkable increase in the IT expenses and in income in return, of all the companies, given to the facts that IT expenses are 17.730 billions in 1990-2004 and in 1999-2004, these are 11.390 billions, which are 64.24% of total IT expenses. The net income is 75.960 billions in the years 1990-2004 and for the years 1999-2004 it is 52.40 billions. The percentage increase in net income thus comes to 69.04% for year 1990-2004.

Initially many organizations worldwide moved toward IT under an assumption that there would be a major reduction in transaction cost. However, because of various problems including lack of proper IT infrastructure and limited access to Internet in developing countries and in Pakistan too, the IT base applications became an ad-on channel providing better and more efficient services to the organization stakeholders. The IT base business processing to retain customers has become more significant drivers of automation although cost reduction remains one of the long term drivers.

246 The plausible reasons to this increase cost as revealed in our results are due to the introduction of new IT products and improper investments of failing to match IT capabilities to organizational need. Both the sectors have failed to identify a particular strategy for IT investments and share them with those responsible for planning. The organizations have been investing in IT without really having a strategy for its usage and a plan to make this investment work for the organization. The new computers were needed either due to the reasons that the competitors had it or it was recommended by some vendors. The management being pushed into buying a piece of hardware and software programs and when the machine was there, the companies began to think as to what uses can and should it be put to. This approach neither worked in past nor it will work in future. The management now is very much educated about the facts but still is unable to devise a proper investment strategy. A plan is needed to be worked out as to what kind of application software is needed, what kind of benefits are expected over what period of time needing what size and capacity of hardware. While setting up an IT strategy, it is imperative that first of all the applications that shall form part of the overall plans be identified, as also the information needs of the different levels of users from each. As revealed in our study that the management performance does depends upon the properly designed M.I.S. Therefore, the hierarchy of information needs has to be established for all levels of management. A detailed cost and benefits analysis of each application also is to be made.

As reveled through our analysis, a proper categorization of IT cost is missing in organizations. It is also needed to be done. The cost, both in term of capital expenditure on hardware and software, as well as the operating cost of running and maintaining any application, taking into account its growth in size and scope over the years is to be calculated. The data integration and capturing is to be ensured. The implementation models of each application should also be established and it should be ensured that the compromises made during implementation have not affected the overall design of the applications. The implementation of each application should ensure that the benefits have been calculated to be delivered as per calculations.

247 Overall, the strategy should payoff handsomely for the organization, both for short and long term and should have healthy return on investments.

At present, except a few, most of the organizations in both the sectors are operating in private sectors where they have more freedom on decision making and deployment of funds. The deregulation or powers, liberalization of the regulated regimes and all round market orientation in the organizations working have therefore ushered a totally new era in the Pakistani organizations. The new licensed banks and manufacturing industries have a clean beginnings and modern technology in operations is their trump card in attracting business. They can rationalize IT projects cost by adopting aforementioned strategy and maximize their benefits. Newer and newer information systems cost millions but can not be dispensed with when the competitor invest in them and move ahead. But at the same time cost associated with these systems is to be rationalized as above and investment be made in accordance with the need.

2. Our results revealed that although the companies in both the sectors which are using in-house developed systems are performing very well but the performance of the companies which are using world class ERP systems/standard applications for their core areas is excellent.

The deregulations and increasingly competitive environment has possessed a challenge in term of efficiency now. An analysis by the computer giant “IBM” predicts that over the next decades, the pace of technological innovation would reinforce Darwan’s law of the survival of the fittest’ and as a result, only most efficient organizations would survive while the less efficient organization would be driven out of the market. It is extremely essential, therefore, for organizations to maximize the use of new technology in order to increase efficiency, reduce their cost and be in the market. In the highly competitive environment of 21st century with increased need of integration of information, organizations will not be able to fulfill their organizational need and to attract customers with present out dated systems.

248 Efficiency and technology will go hand in hand in future. Banks will need to rationalize the scale of branch network by deploying latest information and communication technology and manufacturing organizations also have to work with more advanced integrated automated systems. Increased use of information for decision making will make possible centralization of many routine processing operations currently carried out in the branch or regional office. Tomorrow organizations will be vastly different from the present ones. All the organizations in both the sectors will have to focus on enhancing and developing new products so as to increase their income. As a result, an organization needs to enhance existing systems with new features and functions and to build systems for introducing new products and services in the existing system is compulsory. Each organization and its circumstances are unique in terms of the organization’s history and culture, the characteristic of employees and management, strategy, and customers it serves. So their need differ to have IT systems which meets their requirements. But the successful organizations are those which are open to change, innovations, and learning. In concise terms, these changes can be managed through i) A good information systems ii) latest technology and skills for decision making iii) Improved customer services iv) Friendly attitude pattern of the personnel at all levels.

It is high and better time the organizations should develop some framework for gathering information about suitable IT through products/services a company may offer, and quantitative and qualitative benefits a company may receive. Such an exercise can provide wealth of information which can be used to evaluate the performance of an organization vis-a-vis IT and assess competitive advantages which the organization may get by same way. Such information will not only help an individual organization but also the entire industry as well as the regulatory authorities. The other dimensions on which information about IT need to be collected are; 1) Existing infrastructure 2) IT spending 3) Future IT investments 4) Organization 5) Benefits and impact. This all will greatly help to coordinate efforts and schedule information technology projects and give them priority, taking into

249 considerations major objectives. In future organizational scenario for the deployment of IT is going to be more challenging.

During the last few years, organizations have already gone through different stages of ‘restructuring’, ‘reinvesting’ and, ‘reengineering’. Future IT scenario is changing very fast. Though it may be difficult to make any predictions about the future but timely decisions making and prompt action are two major ingredients for a successful organization. The organizations have to have twin strength of MIS and Technology to compete. The very future of both the sectors hinges on strategically applying IT in new and innovative way. This phenomenon raised the need to utilize the world class IT systems. All this would be possible only with the use of ERP systems. As the world is moving towards integrated standard packages so be the Pakistani organization.

The ERP systems are becoming of increasing importance as integrated part of business networks. They support ‘e-business implementation’ for better enterprise performance, ‘integrate activities’ for higher enterprise efficiency, and enjoying a ‘modular architecture’, for future extensions and further benefits. To get these systems right at the movement toward a global economy is evident in many unfolding trends. It may initially cost high to the companies but would definitely provide them cost saving gradually and competitive edge in future. The organizations may develop their own ERP systems or the world leading standardized integrated software application packages i.e. SAP or JD Edward(Oracle)/ Misys, Fidelity etc., can be considered by the organizations because of their world wide acceptance and usage. If the organizations can not afford the entire modules then few of them initially may be acquired. In the selection process however followings critical factors are crucial and should be taken into account to have cost effective better system 1) The basic features of the ERP systems software 2) The application features of the ERP with regards to specific business of the enterprise 3) The ERP vendor or supplier market strength and support to customers 4) The ERP implementation speed and 5) The ERP cost.

250 3. Pakistani organizations are not lagging behind multinational companies now in offering technology based services to their customers. Our survey reveals that local banks surpass the foreign bank and manufacturing companies, both in technology adoption and performance. Except Citi bank and Standard Chartered bank, all other foreign banks are operating with branch network of 1-6 branches through out the country. The local banks are facing stiffening competition among themselves and with their counterpart foreign banks due to increasing demand of customers. The local banks have huge branch network. So to manage it they will have to further deploy the state-of-the-art technology and heavily invest in term of money and human resources to transform old systems and procedures in order to make them compatible with the latest technology. As far as IT products currently being used by Pakistani companies, they are of course world class and at par with international standard, however it is the area of application of these IT products where these industries were immature and improvements in application is much desired to bring quality and standard in customer services as well as strengthening the communication infrastructure. There is a need for standardized applications, new skills, new attitude, new organizational structures, and new relationships in a technology-driven environment. A strong program in human resources development at all level is required both at the individual organization as well as industry level. Alongside, the recruitment of high caliber staff is necessary.

4. It is observed through our surveys that though the organizations are taking proper measures for security, authenticity, consumer protection and privacy of data through appropriate technologies for encryption of data for secured transactions, regular and multiple backups and extensive use of password and other forms of authorization to have security, but still there exist lot of things to be done in this regard for more security. As in banking where the computers are more open to public ATM etc , many instances of unauthorized funds withdrawals and transfers have occurred. As also pointed out by Federal Financial Institutions Examination Council (FFIEC, USA) that legacy system of user ID and password is inadequate for financial transactions, so there is a need to use at least two factors authentication similar to one used for credit

251 card transactions and that the selection and use of authentication technologies should depend on the results of the financial institution’s risk assessment process. Electronic transaction ordinance with the electronics crimes act and data piracy act should be enforced immediately by the government.

5. Our research revealed that the organizations are faced with following major problems of IT implementation 1) Inadequate telecommunication systems 2) Lack of adequate trained human capital 3) Selection of IT system to suit the organizations growing volumes of transactions 4) Management unawareness on utility of computer information on better output. 5) lack of planning. 6) Organizational/systemic problems like culture, economical, political, social, governmental etc. To overcome these problems the experience of those who have successfully adopted Information Technology can help by providing guidance. The advanced countries have been accumulating experience not only in formulating and adopting polices and programs that promote the generation and diffusion of IT, but also in assessing their effectiveness. Such experiences can be shared with advanced countries. Such programs which transform their business to overcome challenge into opportunities would have to be carried out by the organizations. The following can also be done in this regard;

i). Present era of globalization is built around falling telecommunication costs. The cost of telecommunication in Pakistan is still higher. Though PTCL has already reduced tariffs but it should bring the charges/tariffs further down for all existing services.

ii). The bandwidth should further be increased, prompt delivery and quality of services also be assured.

iii). The Pakistan has state-of-the-art telecommunication network but needs immediately an overhaul to the old PTCL organizational structure to make it line with the world standard.

252

iv). It is an urgent need that PTCL should further enhance its communication network and other telecommunication infrastructure to all cities of the country to provides extended communication dial up, DSL, dedicated bandwidth, VOIP applications, cheaper call rate and domain server to the companies by replacing/enhancing the current infrastructure of the current PTCL network. The role of the government in this regards has become very crucial after privatization of the local largest loop conglomerate i.e. PTCL to Etisalat, which is a regional telecommunication giant with a large sophisticated network of switches and true telecommunication cognoscente. It has extensive experience in both, product launch activities as well as enhancing customer base and thus can cater the need and requirement of the masses. Etisalat’s management with its brand name and success rate that it foster over years of evolution can make PTCL a success and should take these measures immediately for increase its services and revenues. v). The country has abundant pool of young talents but they are lacking with competency for using new IT products. The Government of Pakistan has been supportive to all digital initiatives in the recent past but it urgently needs to further revolutionize its IT infrastructure. It needs to educate and train and bring its workforce to the international standard. It should bring intense focus on building an information based economy by upgrading the technical and managerial skill of people. The training programs similar to that, which are being offered by Simens and Punjab Information Technology Board for most commonly and demanded application software programs i.e S.A.P, Oracle, Misys, Fidelity and all other new products, are to be offered with more low fee structure. It could be done by educational institutions / universities by establishing E.R.P centers in collaboration with leading E.R.P providers. In addition to offering certification in respective package/software, these institutions should also

253 update their current curriculums with new E.R.P courses. The government should give more grants to all those institutions who want to establish such center. The same type of centers should also be established by E.R.P vendors to provide training of such systems through out Pakistan. All this will not only provide an opportunity to the existing IT professionals at mass level to update their knowledge with these new IT systems but also will give chance to the young graduates to equip themselves with changing IT scenario. So that, when they would enter in the job market they would have attained all the prerequisite training of new popular/leading E.R.P systems.

vi). Selection of IT systems is to be made prudent. Procurements should not be made on recommendations of vendors or followings other company’s strategy, but be made keeping in view the company’s own present and future requirements to avoid obsolescence and extra cost. A committee of experts in the organizations is be made to take such decisions. vii). Though the top management of every organization is now fully aware of IT importance and open to its investments but overall still there exist its incapability for IT strategic planning. Plans are made in isolation of IT heads. As a result these plans do not work properly when IT department refuse to provide support for various projects due to certain limitations, so leaving the chance for failure of many projects. The top management must realize the importance and changing role of IT department from facilitator to strategy maker. They should involve IT managers in strategic decision making. In addition, the IT talent should not be generally marginalized but rewarded on performance basis. A good human resource policy with new codes with regards to reward systems for IT employees is mandatory for success of organization. viii). The role of government is very important for development of an industry. The government policies with regards to IT are fairly well but a

254 continuous update to them is needed. A more clear policy with regards to IT is needed by the government as the objectives of the previous IT policy generally lacked coherence and consistency. The IT industry of Pakistan is showing continuous growth in software but still lack behinds in hardware. The government must give more incentives for software exports and also encourage use of local software/ hardware in public and private organizations.

The importance of imported application software SAP, Oracles, PeoplesSoft, Maxio, Misys, Sibel etc. can not be ignored but at the same time local software usages also be encouraged at least for routine ‘non core’ applications, like for example Phonix, a Pakistani software is being used successfully by all banks for one-link ATM network and another common network system is being used for clearing. The local software companies have spent several years in studying banking and manufacturing domain and have developed competitive products. They are able to offer expertise to local and international organizations in their quest towards e-Business. So, they are to be given some share. At the same time the standardization of the software is to be maintained across the organizations with capability for bridges for external communications. This requirement for standardization is getting more crucial with a need of integrated industry wide network. The best example is use of SWIFT package by all the banks for inter bank messages for foreign exchange import/export transactions. Further to optimize cost, organizations may share in other IT facilities. Banks in Pakistan are already cooperating in using ATMs services, the future areas of cooperation in settlement, back office, data warehousing etc. can also be extended in banking sector. The manufacturing companies might also share some common systems in the same way. This industry based standardization/cooperation can be monitored by the regulating authorities i.e. State Bank and Security & Exchange Commission of Pakistan. The government should also

255 encourage the local vendors in research & development activities to produce more innovative IT systems.

6. While the organizations are achieving e-Commerce, e-Business, e-Banking status where all the business transactions are conducted through computer, it is apprehend that there will be no physical contact between the companies and the customers. The organization should devise the ways right now that how they will retain the loyalty of customers in future in the absence of physical contact.

7. To be more cost effective certain traditional (non-core) IT services in both the sectors might also be outsourced to gain more efficiency and effectiveness. The use of this technique free the managers to focus on their core job rather than routine operations. The others could do a better job for the organization while remaining aligned with the organizations’ overall strategy and objectives. This concept is gaining popularity day by day in the world and in Pakistan too. The companies like Packages, Honda Atlas and Standard Chartered bank, which were also in the sample of this study, are already experimenting this and are satisfied. This experience might be shared by other companies as well.

8. No doubt, the Pakistani Government now is fully supporting IT usage in the country and it has taken some steps already to boost IT. The organizations and people in Pakistan are learning fast to use IT but still there is a need for the government to act more quickly with new plans to overcome all existing barriers. The Pakistan’s IT policy planners must devise some newer IT plans and implement them in letter and spirit to compete in the world which is changing at an unprecedented and uncontrollable pace. The government must also consult IT experts before launching any IT policy.

Overall Conclusions 8.3.0 As pointed out in the literature review, IT is playing an important role in the uplift of modern organizations. IT has become a matter of strategic importance for today’s organizations.

256 IT is no longer seen as a choice, but as a necessary strategy for an organization to adopt to improve productivity and enhance its competitiveness in the global economy. A variety of industries are using IT to both ‘lock in’ their customers and ‘lock out’ competitors. Today’s and future Information Technologies offer great potential, but only a few organizations have really succeeded in deploying effective global IT capabilities. IT with all its benefits proves to be a necessity of modern organization systems to cope up with the ever-increasing need for efficient and prompt service to the customers.

The findings of this study revealed, however, that the benefits of IT will be constrained by many problems that exist in the area of use of application software. Coupled with increasing cost and greater emphasis on the Internet and emerging applications from Internet technology, organizations are required to carefully use IT as an important resource to exploit its full potential. However, the task of strategizing IT has become more complex and troublesome due to the rapid pace of its development. The selection of type of IT to adopt with rationalized cost is another major consideration because of keen competition among the key IT providers. The standardization of software/hardware and the use of world class IT systems, across the industries is also the need of time, alongside establishing training centers for most recent E.R.P/customize standard packages in educational institutions with government support.

The implementation of above recommended policy framework may assist in achieving an efficient IT adoption with wider spectrum in both banking and manufacturing sectors and would definitely bring higher growth rate/incomes for these companies to be at top.

Direction For Future Research 8.4.0 This research has explored very important issues of present time by examining the impact of Information Technology (IT) on organizational performance. In this study, a holistic framework was developed to examine the impact of IT on organizational performance for Pakistan’s banking and manufacturing sectors. While the relationship between IT and organizational performance was examined based upon perceptions of the managers and perusing financial reports. The importance of other related factors including systemic, sociological and organizational etc., facilitating or impeding use of IT, was also identified. This framework also

257 shows impact of IT investments, impact of IT systems, impact of top management, and impact of training, impact of user involvement and impact of organizational and systemic factors on organizational performance. It has been observed that IT has positive impact on performance of the companies. IT has been applied throughout all functional areas of both manufacturing and service industries to increase their performance and it is now playing more important role in the organizations than labor and capital. All the companies are investing millions of rupees on IT to make them more competitive, but as per this research findings, the performance of banking sector is seemed to be much grater than the manufacturing sectors and local companies are taking lead in this regard. Proper training and involvement of the user in IT projects, top management commitment and latest IT systems were also found to have greater impact on IT success to increase the management performance.

The role of organizational and systemic factors like culture, government, individuals, social, political and economic factors which may affect the adoption of any technology, is also explored. It is observed that that these factors play an important role in the success or failure of any technology and size of these factors differs across countries and organizations. The proper management of technology as per specific culture, political, social, economic requirements of the organization, can make that technology more successful. Though Government of Pakistan’s role is found very positive to promote IT in the country but still there exist further need for the government to support IT sector to enhance IT facilities.

The similar nature research can also be carried out for other sectors of Pakistan’s economy as well, by using the same frame work developed in this research. While finding of this study

suggest the main/basic proposition that IT does have influence on organizational performance,

therefore, there is a need to conduct further research to test the causality between IT and

organization performance by controlling other factors impacting organizational performance.

Beside IT, there are other factors i.e Management, Human Resources, Marketing service and

Manufacturing competency etc. as well, which affect the performance of the organizations.

258 Further investigations into these areas can also be made. This may be achieved by undertaking relevant field work and making a detailed study of the firms in the selected sectors.

259 i Total and IT Employee % Graphical Representation Annexure I

All Foreign Banks Years IT emply % All Foreign Banks 1990-91 4.176904177 7 1991-92 5.213270142 1992-93 5.882352941 6 1993-94 5.052631579 5 1994-95 5.350553506 4 1995-96 4.915254237 1996-97 4.380664653 3 1997-98 3.362391034 2 1998-99 3.369434416 Employees 1999-00 4.026845638 1 2000-01 4.057017544 0 2001-02 4.618689581 % age of IT employees to Total 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 4.771784232 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 4.688995215 2004-05 4.523026316

Annexure II All Foreign Banks Years Tot Emply All Foreign Banks 1990-91 407 1400 1991-92 422 1992-93 442 1200 1993-94 475 1000 1994-95 542 1995-96 590 800 1996-97 662 600 1997-98 803 400 1998-99 831

1999-00 894 Total Employees 200 2000-01 912 0 2001-02 931 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 964 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 1045 2004-05 1216

Total and IT Employee % Graphical Representation Annexure III All Local Banks Years IT emply % All Local Banks 1990-91 0.397944681 1991-92 0.435039241 1992-93 0.484961834 1.4 1993-94 0.507420225 1.2 1994-95 0.524067097 1 1995-96 0.530067262 0.8 1996-97 0.550511879 0.6 1997-98 0.677014899 0.4

1998-99 0.74828114 Employees 0.2 1999-00 0.801463767 2000-01 0.814461154 0 2001-02 0.893144512 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 1.083914002 % age of IT employeesto Total 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 1.148781997 2004-05 1.170427016 Annexure IV All Local Banks Years Tot Emply All Local Banks 1990-91 45735 60000 1991-92 45743 1992-93 45983 50000 1993-94 47101 40000 1994-95 47513 1995-96 49805 30000 1996-97 51770 1997-98 44903 20000 1998-99 41161 10000 1999-00 38804 Total Employees Total 2000-01 39167 0 2001-02 37284 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 33582 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 33949 2004-05 34261

iii Total and IT Employee % Graphical Representation Annexure V

Local Manufacturing Years IT emply % Local Manufacturing 1990-91 0.357698289 1991-92 0.392821382 1992-93 0.4 0.7 1993-94 0.420044215 0.6 1994-95 0.438308131 0.5 1995-96 0.427890011 0.4 1996-97 0.463251054 0.3 1997-98 0.495799477 0.2 1998-99 0.528592023 Employees 0.1 1999-00 0.581037665 0 2000-01 0.610727562 2001-02 0.64618225 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-

2002-03 0.611192462 toTotal of IT employees % age 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 0.631911532 2004-05 0.600529879 Annexure VI Local Manufacturing Years Tot Emply Local Manufacturing 1990-91 12860 18000 1991-92 12983 16000 1992-93 13500 14000 1993-94 13570 12000 1994-95 13689 10000 1995-96 14256 1996-97 14463 8000 1997-98 14522 6000 Total Employees 1998-99 14567 4000 1999-00 14629 2000 2000-01 15064 0 2001-02 15166 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 15707 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 15825 2004-05 16985

iv Total and IT Employee % Graphical Representation Annexure VII

Foreign Manufacturing Years IT emply % Foreign Manufacturing

1990-91 0.611028316 s 1991-92 0.62193605 1.2 1992-93 0.614549092 1993-94 0.624699664 1 1994-95 0.682035193 1995-96 0.758807588 0.8 1996-97 0.790460879 0.6 1997-98 0.819399107 1998-99 0.849087894 0.4 1999-00 0.952569954 0.2 2000-01 0.95444971 2001-02 0.984445757 0 2002-03 0.969397453 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2003-04 1.004548901 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 % age of IT employees to Total Employee Total to employees IT age of % 2004-05 1.032030709 Annexure VIII Foreign Manufacturing Years Tot Emply Foreign Manufacturing 1990-91 13420 16500 1991-92 13667 1992-93 13994 16000 1993-94 14567 15500 1994-95 14662 15000 1995-96 14760 14500 1996-97 14928 14000 1997-98 15011 13500 1998-99 15075 13000 1999-00 15117 Employees Total 2000-01 15192 12500 2001-02 15237 12000 2002-03 15783 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 15828 2004-05 15891

v Total and IT Employee % Graphical Representation Annexure IX

All Banks Years IT emply % All Banks 1990-91 0.431277361 1991-92 0.478717643 1992-93 0.53634895 1.4 1993-94 0.552799731 1.2 1994-95 0.578503798 1 1995-96 0.581406886 0.8 1996-97 0.598870919 0.6 1997-98 0.72419376 1998-99 0.80015241 0.4 1999-00 0.874099451 0.2 2000-01 0.888245715 0 2001-02 0.983906843 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 1.186823366 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 1.256295788 Employees Total to IT employees of % age 2004-05 1.285339798 Annexure X All Banks Years Tot Emply All Banks 1990-91 46142 60000 1991-92 46165 1992-93 46425 50000 1993-94 47576 1994-95 48055 40000 1995-96 50395 30000 1996-97 52432 1997-98 45706 20000

1998-99 41992 Employees Total 1999-00 39698 10000 2000-01 40079 2001-02 38215 0 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 34546 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 34944 2004-05 35477

vi Total and IT Employee % Graphical Representation Annexure XI All Manufacturing Years IT emply % All Manufacturing 1990-91 0.487062405 1991-92 0.510318949 1992-93 0.509202008 0.9 1993-94 0.525997796 0.8 0.7 1994-95 0.564353991 0.6 1995-96 0.596222774 0.5 1996-97 0.629444388 0.4 1997-98 0.660278333 0.3 1998-99 0.691586263 0.2 1999-00 0.769851409 0.1 2000-01 0.783315706 0 2001-02 0.815708976 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 0.790727215 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 0.818247875 Employees Total to IT employees of % age 2004-05 0.809100864 Annexure XII All Manufacturing Years Tot Emply All Manufacturing 1990-91 26280 1991-92 26650 1992-93 27494 35000 1993-94 28137 30000 1994-95 28351 25000 1995-96 29016 20000 1996-97 29391 1997-98 29533 15000 1998-99 29642 10000

1999-00 29746 EmployeesTotal 5000 2000-01 30256 0 2001-02 30403 2002-03 31490 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 31653 2004-05 32876

vii Total and IT Employee % Graphical Representation Annexure XIII All Companies Years IT emply % All Companies 1990-91 0.451520256 1991-92 0.490283595 1992-93 0.526251708 1.2 1993-94 0.542839407 1 1994-95 0.573253409 0.8 1995-96 0.586820466 1996-97 0.609852975 0.6 1997-98 0.699105517 0.4 1998-99 0.755227964 1999-00 0.829445308 0.2 2000-01 0.843107983 0 2001-02 0.909382378 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2002-03 0.846507965 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 1.047308956 Employees Total to IT of employees % age 2004-05 1.056281363 Annexure XIV All Companies Years Tot Emply All Companies 1990-91 72422 90000 1991-92 72815 80000 1992-93 73919 1993-94 75713 70000 1994-95 76406 60000 1995-96 79411 50000 1996-97 81823 40000 1997-98 75239 30000 1998-99 71634 20000 1999-00 69444 10000 2000-01 70335 0 2001-02 68618

Total EmployeesTotal of companies the all 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004-

2002-03 66036 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 2003-04 66647 2004-05 68353

viii

Annexure XV Functions/Role IT Playing in organizations: Sector Wise

Programming, system Strategy Formulation Telecommunication Business Process Products Total for each S/No. Sector Development & & org. Management Reengineering innovations Maintenance Transformation sector 1 Local Banks 12 11 10 10 11 54 2 Foreign Banks 9 12 8 7 5 41 3 Local Companies 12 11 5 4 3 35 4 Foreign companies 10 12 10 8 8 48 Sum of All Sector 43 46 33 29 27 178

Order of Occurrence 2,1,3,4,5

Function IT Playing in organizations: Banking Vs Manufacturing

Business Strategy Formulation Total for Programming, system Telecommunication Products S/No. Sector Process & org. each Development & Maintenance Management innovations Reengineering Transformation sector 1 Banking 21 23 18 17 16 95 2 Manufacturing 22 23 15 12 11 83 Sum of all Sectors 43 46 33 29 27 178

Order of Occurrence of Banking 2,1,3,4,5 Order of Occurrence of Manufacturing 2,1,3,4,5

Function IT Playing in organizations: Local Vs Foreign companies

Programming, Business Strategy Formulation Total system Telecommunication Products S/No. Sector Process & org. for each Development & Management innovations Reengineering Transformation Maintenance sector 1 Local Companies 24 22 15 14 14 89 2 Foreign Companies 19 24 18 15 13 89 Sum of all Sectors 43 46 33 29 27 178

Order of Occurrence of Local companies 1,2,3,4,5 Order of Occurrence of Foreign Companies 2,1,3,4,5 ix Annexure XVI Application Software Use Analysis: All Sectors

Standard Vendor application; ERP In house Consultants' Developed S/No. Sector Copied Software Total Supplied Systems i.e SAP, Developed System Systems MSYS, ORACLES 1 Local Banks 0 4 11 11 1 27 2 Foreign Banks 0 0 10 2 0 12 3 Local Manufacturing 0 4 10 7 0 21 4 Foreign Manufacturing 0 9 4 4 0 17 Sum of all Sectors 0 17 35 24 1 77

Order of Occurrence 3,4,2,5,1

Application Software Usage Analysis: Banking Vs Manufacturing

Vendor Standard application; ERP System In house Consultants' Developed Copied S/No. Sector Total Supplied i.e SAP, MISYS, ORACLES Developed System Systems Software 1 Banking 0 4 21 13 1 39 2 Manufacturing 0 13 14 11 0 38 Sum of all Sectors 0 17 35 24 1 77

Order of Occurrence of Banking 3,4,2,5,1 Order of Occurrence of Manufacturing 3,2,4,1,5

Application Software Usage Analysis: Local Vs Foreign

Vendor Standard application; ERP system In house Consultants' Copied S/No. Sector Total Supplied i.e SAP, MISYS, ORACLES Developed System Developed Systems Software 1 Local Companies 0 8 21 18 1 48 2 Foreign companies 0 9 14 6 0 29 Sum of all Sectors 0 17 35 24 1 77

Order of Occurrence of Banking 3,4,2,5,1 Order of Occurrence of Manufacturing 3,2,4,1,5

Annexure XVII Information System Levels in organization: Sector Wise

Transaction Executive Decision Support Management S/No. Sector processing Total or each sector Support Systems systems information System system 1 Local Banks 4 6 11 12 33 2 Foreign Banks 8 7 11 12 38 3 Local Manufacturing 4 7 12 12 35 4 Foreign Manufacturing 8 9 12 12 41 Sum of all Sectors 24 29 46 48 147

Order of Occurrence 4,3,2,1

Information System Level : Banking Vs Manufacturing Companies

Executive Decision Support Management Transaction processing S/No. Sector Total of each sector Support Systems systems information System system 1 Banking 12 13 22 24 71 2 Manufacturing 12 16 24 24 76 Sum of all Sectors 24 29 46 48 147

Order of Occurrence of Local companies 4,3,2,1 Order of Occurrence of Foreign Companies 3,4,2,1

Information System Level : Local Vs Foreign Companies

Executive Decision Support Management Transaction processing S/No. Sector Total of each sector Support Systems systems information System system 1 Local companies 8 13 23 24 68 2 Foreign companies 16 16 23 24 79 Sum of all Sectors 24 29 46 48 147

Order of Occurrence of Local companies 4,3,2,1 Order of Occurrence of Foreign Companies 4,3,1,2

xi Annexure XVIII IT Adoption Problems: Sector Wise Pakistan Lack of Adequate Lack of Selection of Judicious Management Employees Management Inadequate Total for each S/no. Sector Trained Proper IT Proper IT Use of Unaware on IT Non Shirks to Telecommunicati Sector Employees Planning Systems Computer Systems Cooperation Investments on infrastructure 1 Local Banks 6 8 9 9 4 5 5 3 49 2 Foreign Banks 4 10 8 5 7 2 2 4 42 3 Local Manufacturing 6 9 5 4 2 0 5 0 31 4 Foreign Manufacturing 10 8 8 6 5 2 5 6 50 Sum of all Sectors 26 35 30 24 18 9 17 13 172 Order of Occurrence 2,3,1,4,5,7,6,8

IT Adoption Problems: Banking Vs Manufacturing

Selection Lack of Pakistan Lack of of Judicious Management Employees Adequate Inadequate Proper Management Shirks Total for S/no. Sector Proper Use of Unaware on Non Trained Telecommunication IT to Investments each sector IT Computer IT Systems Cooperation Employees infrastructure Planning Systems

1 Banking 10 18 17 14 11 7 7 7 91 2 Manufacturing 16 17 13 10 7 2 10 6 81 Sum of all sector 26 35 30 24 18 9 17 13 172

Order of Occurrence of Banking 2,3,4,5,1,6,7,8 Order of Occurrence of Manufacturing 2,1,3,4,7,5,8,6

IT Adoption Problems: Local Vs Foreign Companies

Lack of Adequate Pakistan Inadequate Lack of Selection of Judicious Management Employees Manageme Total S/no. Sector Trained Telecommunication Proper IT Proper IT Use of Unaware on IT Non nt Shirks to for each Employees infrastructure Planning Systems Computer Systems Cooperation Investments sector

1 Local companies 12 17 14 13 6 5 10 3 92 2 Foreign Companies 14 18 16 11 12 4 7 10 80 Sum of all sector 26 35 30 24 18 9 17 13 172

Order of Occurrence of Banking 3,1,2,4,7,8,5,6 Order of Occurrence of Manufacturing 2,3,1,4,5,7,8,6

xii

Annexure XIX IT Acceptance Reason Analysis: Sector Wise

Ease of Relative Simple Less Competitive Low Productive/ Total for each S/No. Sector Compatibility Use Advantage Process risky Edge cost Efficient sector 1 Banks 11 12 8 6 4 12 8 12 73 2 Foreign Banks 12 12 8 11 4 10 9 12 78 3 Local Manufacturing 10 9 8 4 5 12 7 12 67 4 Foreign Manufacturing 11 10 11 7 7 11 4 11 72 Sum of all Sector 44 43 35 28 20 45 28 47 290

Order of Occurrence 8,6,1,2,3,4,7,5

IT Acceptance Reason Analysis Banking Vs Manufacturing

Ease Relative Simple Less Competitive Productive/ Total for S/No. Sector Compatibility Low cost of Use Advantage Process risky Edge Efficient each sector 1 Banks 23 24 16 17 8 22 17 24 151 2 Foreign Banks 21 19 19 11 12 23 11 23 139 Sum of all Sector 44 43 35 28 20 45 28 47 290

Order of Occurrence of Banking 2,8,1,6,4,7,3,5 Order of Occurrence of Manufacturing 8,6,1,2,3,5,4,7

IT Acceptance Reason Analysis: Local Vs Foreign Sector

Ease of Relative Simple Less Competitive Low Productive/ Total for S/No. Sector Compatibility Use Advantage Process risky Edge cost Efficient each sector 1 Local Companies 21 21 16 10 9 24 15 24 140 2 Foreign Companies 23 22 19 18 11 21 13 23 150 Sum of all Sector 44 43 35 28 20 45 28 47 290

Order of Occurrence of Local Companies 8,6,1,23,7,4,5 Order of Occurrence of Foreign Companies 1,8,2,6,3,4,7,5

xiii

Annexure XX Reasons Organizations think for their IT success: Sector Wise

Top Management Organizations Proper IT Proper Organizations S/No. Sector Government Role Total of each sector Commitment Planning Investments 1 Local Banks 12 8 6 4 30 2 Foreign Banks 12 10 11 1 34 3 Local Manufacturing 12 10 8 4 34 4 Foreign Manufacturing 11 10 11 5 37 Sum of all Sectors 47 38 36 14 135

Order of Occurrence 1,2,3,4

Reasons Organizations think for their IT success: Banking Vs Manufacturing

Top Management Organizations Proper Organizations Government S/No. Sector Total of each sector Commitment Proper IT Planning Investments Role 1 Banking 24 18 17 5 64 2 Manufacturing 23 20 19 9 71 Sum of all Sectors 47 38 36 14 135

Order of Occurrence of Local companies 1,2,3,4 Order of Occurrence of Foreign Companies 1,2,3,4

Reasons Organizations think for their IT success: Local Vs Foreign Companies

Top Management Organizations Proper Organizations Government S/No. Sector Total of each sector Commitment Proper IT Planning Investments Role 1 Local companies 24 18 14 8 64 2 Foreign companies 23 20 22 6 71 Sum of all Sectors 47 38 36 14 135

Order of Occurrence of Local companies 1,2,3,4 Order of Occurrence of Foreign Companies 1,2,3,4 xiv

Annexure XXI Measures To Overcome IT Adoption Problems: Sector Wise

S/No. Sector Education & Training Employees Motivation Employees Rewards Job Threat Total of each sector 1 Local Banks 12 12 7 3 34 2 Foreign Banks 12 12 6 0 30 3 Local Manufacturing 12 12 8 1 33 4 Foreign Manufacturing 12 12 4 2 30 Sum of all Sectors 48 48 25 6 127

Order of Occurrence 1,2,3,4

Measures To Overcome IT Adoption Problems: Banking Vs Manufacturing

Education & S/No. Sector Employees Motivation Employees Rewards Job Threat Total of each sector Training 1 Banking 24 24 13 3 64 2 Manufacturing 24 24 12 3 63 Sum of all Sectors 48 48 25 6 127

Order of Occurrence of Local companies 1,2,3,4 Order of Occurrence of Foreign Companies 1,2,3,4

Measures To Overcome IT Adoption Problems: Local Vs Foreign

Education & S/No. Sector Employees Motivation Employees Rewards Job Threat Total of each sector Training 1 Local companies 24 24 15 4 67 2 Foreign companies 24 24 10 2 60 Sum of all Sectors 48 48 25 6 127

Order of Occurrence of Local companies 1,2,3,4 Order of Occurrence of Foreign Companies 1,2,3,4

xv Pakistani Top Banks & Manufacturing Companies IT Usages Summary/Statistic Annexure XXII

Local Banks

Sr.no Company Name Year of Year of Systems computerized Ways of systems Name of Year of Level of integration of Hardware being used Programming Main areas of IT Mode of Inter starting starting developed Standard Installing systems Software being Investments office/city connectivity Busines IT application standard used in Pak. Application 1 Allied Bank Ltd. 1942 1978 All Core banking areas Got from vendors Unibank 1998 All Core banking IBM, DEL servers, Pc Cobol, Oracle, Customer focus ISDN, DSL, Radio Link, All Traditional systems In House development Swift systems online, networking, Acer, wyse FoxPro, Windows areas, Traditional VSAT Traditional systems terminals, Epson, HP, xp and Linux organizational integrated at Head office Printronix printers Operating systems systems level 2 Askari Commercial 1992 1992 All Core banking areas Got from Unibank 1992 All Core banking NCR servers, Del, Acer Cobol, Oracle, Customer focus ISDN, DSL, Radio Link, Bank All Traditional systems vendors Swift systems online, servers, Epson, HP, FoxPro, Windows areas, Traditional VSAT In House development Traditional systems Printronix printers xp and Unixe, organizational integrated at Head office Linux Operating systems level systems, Visual Basic 3 Bank Of Punjab 1989 1989 All Core banking areas In House development, Bop2001 in No standard All current a/c online Acer servers, Acer, Cobol, Oracle, Customer focus Dial up, DSL All Traditional systems BOP 2001 software house application and each branch send Raffels terminals, Dotnet, Cshop, areas, Traditional software data on daily basis Epson, HP printers Unix, Windos Xp organizational package operating systems systems 4 Bank Al-Habib Ltd. 1992 1992 All Core banking areas In House development, No standard No standard All Core banking IBM, HP servers, IBM, Jawa, Windows Customer focus ISDN, DSL, Radio Link, All Traditional systems Got from Consultants application application systems online, Acer Monitors, Epson, XP operating areas, Traditional VSAT Traditional systems HP, IBM printers systems organizational integrated at branch level systems 5 Bank Alflah Ltd. 1997 1997 All Core banking areas Got developed from out No standard No standard All Core banking HP servers and V.B 6, SQL server, Customer focus ISDN, DSL, Radio Link, All Traditional systems side consultants application application systems online, monitors, HP, Epson, Windows xp, areas, Traditional VSAT but plan to Traditional systems Printronix printers windos 2003 organizational get integrated at Head office systems 6 Faisal Bank Ltd 1987 1992 All Core banking areas In House development IBS in hose IBM in house All Core banking Sun Slorince servers, COBOL, Windows Customer focus ISDN, DSL, Radio Link All Traditional systems system but developed system systems online, Acer, DEL terminals, xp areas, Traditional planning to Traditional systems HP, IBM printers organizational purchase integrated at Head office systems Sibol 7 First Women Bank 1989 1989 Current & saving A/C, In House, Got from No standard No standard All off line systems, no IBM servers, LAN, COBOL, FoxPro, Traditional Dial up just for Internet Ltd. G.L Payroll Consultant application application integration between IBM monitors, Epson, Unix, Windows organizational usages systems & branches HP printers Xp systems 8 Habib Bank Ltd. 1943 1966 All Core banking areas In House, Got from MOBS, 1995, 2003 All Core banking IBM,NCR mini,servers Cobol, Oracle, Customer focus ISDN,DSL, Radio Link, All Traditional systems Consultants, Standard SWIFT, systems online, NCR, DEL, VisualBasic, C++, areas, Traditional VSAT Application MISYS Traditional systems Acer,INBOX monitors, Unix, Linux, organizational integrated at regional Epson, HP, Printronix Windos XP system level Printers 9 Metro Politan Bank 1992 1992 All Core banking areas In House Consultant No Standard No Standard All Core banking Sun, Sabree, IBM , Java, C++, SQL Customer focus ISDN,DSL, Radio Link, All Traditional systems Application Application systems online, Epson areas, Traditional VSAT Traditional systems organizational integrated at regional system level 10 Muslim Commercial 1948 1970 All Core banking areas In House, Got from Sibol 2001 All Core banking IBM As/400, HP Cobol, Java, Customer focus ISDN,DSL, Radio Link, Bank Ltd All Traditional systems Consultants, Standard systems online, Servers, IBM, NCR, FoxPro, Os/400, areas, Traditional VSAT Application Traditional systems Philips Monitors, Windows Xp organizational integrated at Head office EPSON, HP, IBM system printers 11 National Bank Of 1949 1980 All Core banking areas In House, Got from Planning for No Standard All Core banking IBM Mini, Servers, Java, C++, FoxPro, Customer focus DSL, ISDN Pakistan All Traditional systems Consultants, Standard FIDILITY Application systems online, LAN, DEL monitors, OS/400 Windows areas, Traditional Application system Traditional systems EPSON, HP printers Xp organizational integrated at Head Office system 12 United Bank Ltd. 1959 1967 All Core banking areas In House, Got from Unibank, 1995 All Core banking IBM, NCR, DEL mini, Oracel, Cobol, Customer focus ISDN,DSL, Radio Link, All Traditional systems Consultants, Standard Swift, CTL systems online, servers, IBM, NCR Developer 2000, areas, Traditional VSAT Application Traditional systems DEL monitors, Net organizational integrated at Head Office EPSON, HP printers system

xvi

Pakistani Top Banks & Manufacturing Companies IT Usages Summary/Statistic

Foreign Banks

Sr. No Company Year of Year Systems Ways of systems Name of Standard Year of Level of integration of Hardware being used Programming Main areas of IT Mode of Inter Name starting of computerized developed application Installing systems Software being used Investments office Busines in starti standard connectivity Pak. ng IT Applicati on 01 American 1980 1990 All Core banking In House, Amex SBS(Standard 1997,2003 All Core banking and IBM, servers, IBM, NCR IBM COBOL Visula Customer focus Dial up for Express Bank areas world application Business traditional systems monitors EPSON, HP, printers, Basic, Novel NET 4, areas, Traditional Internet usage Ltd. All Traditional application), In Computerized but off line Lan Cliper windows organizational systems House developed Operating systems. system 02 ABN Amro 1948 1990 All Core banking In House, In House developed 1995 All Core banking and DEL, HP servers, DEL , IBM Developer 2000, Customer focus ISDN,DSL, Bank Ltd. areas ABN traditional systems monitors EPSON, HP, printers, Windows Xp, areas, Traditional Radio Link, All Traditional Standard Computerized but off line VB.Net, Windows, organizational VSAT systems Application Solaris Operating system systems 03 Bank Of 1980 1988 All Core banking In House In House developed 1988 All Core banking and IBM P4 Servers, IBM Monitors, Cobol, FoxPro, VB, Customer focus Dial Up for Tokyo areas Development traditional systems HP, Epson Printers Windows xp areas, Traditional Internet use only All Traditional Computerized but off line organizational systems system 04 Citi Bank 1980 1988 All Core banking In House In House 1988 All Core banking systems IBM Mini, Servers, HP Toshiba SQL, VB, Cobol etc. Customer focus ISDN,DSL, N.A areas Development Development, online, Traditional monitors, HP Printers areas, Traditional Radio Link, All Traditional Citibank World wide systems integrated at organizational VSAT systems one package Branch Level system 05 Deutsche 1962 1990 All Core banking IDMS(Integrated In House developed 1995 All Core banking systems IBM, HP Servers, DEL Monitors, COBOL, C++, Customer focus ISDN,DSL,Dxx, Bank Ltd. areas Data Mgt. online, Traditional HP, Printronix Printers Windows Xp areas, Traditional VSAT All Traditional Systems) IN systems integrated at organizational systems House developed Branch Level system 07 Habib Bank 1979 1990 All Core banking HPLUS( Bank In House developed 1990 All Core banking systems Sun Slorince, NCR, Aceer Jawa, Cobol, Linux, Customer focus ISDN,DSL,Dxx, AG Zurich areas own software online, Traditional Monitors, HP,OKEY Printers Windows XP areas, Traditional VSAT All Traditional package world systems integrated at Operating systems organizational systems wide) Branch Level system 08 Hong Kong 1982 1985 All Core banking In House, Global In House Global 1985 All Core banking systems IBM As 400 Servers, Del RPG, COBOL, VB, Customer focus ISDN,DSL,Dxx, Shanghai areas in house systems development online, Traditional Terminals, IBM & HP Printers MS ACCESS, areas, Traditional VSAT Bank Ltd All Traditional systems integrated at Windows XP, 2000 organizational systems Branch Level system 09 Oman 1996 1996 All Core banking In House In House 1996 All Core banking systems Gateways, Del P4 servers, DEL Cobol, Windows xp, Customer focus Dial Up for International areas Development Development o Traditional systems. No Monitors, Epson, HP printer Windos 98 areas, Traditional internet Bank All Traditional Standard PIBAS Integration organizational systems application system 10 Rupali Bank 1976 1988 All Core banking Got from Market, BANK GENERAL 1995 All Core banking systems Unbranded P4 server, LAN, Cobol, Excell, Traditional Systems Dial Up for Ltd. areas MZ International Traditional systems. No Unbranded Terminal, Epson, HP Windows 96, Unix internet All Traditional Integration Printers systems 11 Standard 1947 1985 All Core banking In house EBBS global 1995 All Core banking systems IBM, DEL NCR servers & Java, Linux Customer focus ISDN, DSL, Chartered areas Development, application o Traditional systems. Terminals, Epson, HP printers areas, Traditional DXX, VSAT, Bank All Traditional EBBS global Integrated country level organizational Radio Link systems application system 12 Mashraq 1996 1996 All Core banking In House In House 1996 All Core banking systems Del server, DEL Monitors, Cobol, Windows xp, Customer focus Dial up for Bank Ltd. areas Development Development Traditional systems. No Epson, HP printer Windos 98 areas, Traditional internet only All Traditional Integration organizational systems system

xvii

Pakistani Top Banks & Manufacturing Companies IT Usages Summary/Statistic

Foreign Manufacturing Companies

Sr. Company Year of Year Systems computerized Ways of systems Name of Standard Year of Level of integration Hardware being used Programming Main areas of IT Mode of No Name starting of developed application Installing of systems Software being used Investments Inter office Busines in starti standard connectivity Pak. ng IT Application 1 Bata Pakistan 1960 1985 Retail, POS Payroll, In House development, Core systems from Head Installed As/400 Have POS systems in IBM As/400 & netfinity Cobol, Visual Traditional Dial up, DSL Ltd. Accounts, Costing, etc Got from consultants, office, Payroll from in 1985 150 shops but not servers, IBM terminals, Foxpro, Os/400 & organizational for internet from parent company systems Ltd. online. HP & IBM printers unix operating system etc. systems 2 Colgate 1985 1990 Payroll, Inventory, GL, In House developed In House developed IBM Mini & Interlinked with IBM mini computer, VB, SQL, JAVA Traditional Dial up, DSL Pakistan Ltd. Sales etc. Servers, No Zonal offices DEL terminals, Epson & organizational for internet standard HP printers systems etc. Application 3 I.C.I Pakistan 1960 1985 All business applications In House development SAP(ERP) Germany 2000 Interlinked with HP, DEL servers & VB, Cobol, Linux, All organizational Dial up, DSL Ltd. S.A.P business units terminals, HP, XEROX Windows 200 systems etc. printers operating systems 4 L.G 1989 1990 All business applications In House development, No standard application No standard Sales system HP servers, del monitors, Oracle developers, All organizationa Dial up, Pakistan(New are computerized Got few programs from application Interlinked with all Epson & HP printers foxpro, Windows XP systems DSL, Allied consultants branches in country Wirless Electronic) 5 Pakistan 1948 1985 All business applications In House development, S.A.P (ERP systems) 2000 All systems HP Servers, Terminals, Oracles, Windows All organizational Dial up, Tobacco Co. Got from vendors interlinked world HP, Epson printers 2000 xp systems DSL, VSAT wide 6 Simens Pakistn 1965 1980 All business applications In House development S.A.P (ERP systems) 2000 All systems HP servers & terminals, Oracles, Windows xp All organizatiopn DSL, VSAT Ltd. interlinked world HP printers systems wide 7 Suzuki 1985 1982 All business applications In House development, No Standard systems 1999 All systems IBM AS/400, HP RPG 400/ Oracles, All organizational Dial Up for Pakistan Ltd Got from Market interlinked within servers, IBM, DEL OS/400, Windows systems internet etc, company terminals, Epson, HP Xp printers 8 Reckitt 1970 1982 All business applications In House development, JD Edwar/Oracle 2001 All systems are DEL servers & Cobol, Oracles All Organizational Dial up, DSL Benkiser are computerized Got from Market interlinked Terminals, HP Printers Systems Pakistan Ltd. 9 Uni lever 1965 1970 All business applications In House development, MFG/Pro 2000 All systems are IBM Risk HP servers ASP VB, Oracles, All organizational Dial up, Pakistan ltd. are computerized Got from Market interlinked IBM, Del, & HP Windows XP, W2k3 systems DSL, VSAT terminals, Epson, HP Printers 10 Proctor & 1970 1980 All business applications In House Development, S.A.P world wide, 1999 All systems are HP, IBM servers and VB, Oacles, All organizational Dial up, Gamels are computerized from Consultant Platinium in Pakistan interlinked terminals, Epson, HP Windows XP systems DSL, VSAT Pakistan Ltd. printers 11 Nestle Pakistan 1988 1988 All business applications In House Development, S.A.P 2005 All systems are DEL, HP servers & VB, Oracles All organizational Dial up, Ltd. are computerized from Consultant interlinked terminals systems DSL, VSAT 12 Philips 1949 1970 All business applications In House Development, P-GIS, ERP stnadarad 1998 All systems are IBM As/400 servers, RPG 400, VB, All organizational Dial up, Electrical Co. are computerized from Consultant systems, J>D interlinked IBM, HP terminals, OS/400, Widows xp systems DSL, VSAT Pakistan ltd Edward/Oracle Epson, HP printers xviii

Pakistani Top Banks & Manufacturing Companies IT Usages Summary/Statistic

Local Manufacturing Companies

Sr. No Company Name Year of Year of Systems computerized Ways of systems Name of Year of Level of Hardware being used Programming Main areas of IT Mode of starting starting developed Standard Installing integration of Software being Investments Inter office Busines in IT application standard systems used connectivit Pak. Application y 1 D.G.Khan Cement Ltd. 1984 1990 All business applications In House No standard N.A All systems are DEL Servers & Terminals, HP Oracles, Visual All Dial Up, are computerized Development, from application interlinked printers, LAN, WAN FoxPro, Organizational DSL, Consultant Windows XP systems VSAT, DXX,SAT 2 General Tyres Ltd 1964 1984 All business applications In House No standard N.A All systems are IBM As/400, IBM, ACER, HP RPG/400, VB, All Dial Up, are computerized Development, from application interlinked servers, HP, Epson printers Oracles Organizational DSL Consultant systems 3 Lakson Tobaco Ltd. 1970 1982 All business applications In House S.A.P 2005 All systems are Sun slornace, servers, Inbox Unix, Windos XP All Dial up, are computerized Development, from interlinked Terminal, Epson Hp printers Organizational DSL, Radio Consultant systems 4 Packages Ltd. 1965 1966 All business applications In House S.A.P 2000 All systems are HP, Sun servers, HP, Del A.s.P, Windows All FR line, are computerized Development, from interlinked terminals, Epson, HP printers xp, N.T, Linus Organizational VSAT Consultant systems 5 Service Industries Ltd. 1970 1980 Most systems are In house No standard N.A All systems are IBM, HP servers, non branded Oracal, Traditional DSL, Dial computerized Development, from application stand alone but terminals, Epson, HP printers developer, organizational up consultants integrating Windows 2000 and sales systems 6 Indus Motors Ltd 1990 1990 All business applications In House S.A.P 2000 All core systems IBM, HP servers, WAN, HP, Windows N.T, All DSL, Dial are computerized development, Got re integrated Philips Terminals, Epson, HP VB, Jawa organizational up from consultants printers systems 7 Honda Cars Ltd. 1994 1994 A/c, Payroll, sales, In House No standard N.A All systems are IBM As/400, Hp, IBM, DEL, Os/400, All Dial Up, inventory etc development, Got application interlinked HP terminals, Epson, HP, Windows NT, organizational DSL from consultants Printronix printers RPG LE systems 8 Pakistan Electric Company 1985 1992 All business applications In House No standard N.A All systems are IBM As/400, Hp, IBM, DEL, RPG/400, VB, All Dial Up, are computerized development, Got application interlinked HP terminals, Epson, HP, Oracles organizational DSL from consultants Printronix printers systems 9 Dawlence 1985 1991 All business applications In House No standard N.A All systems are IBM As/400, Hp, IBM, DEL, A.s.P, Windows All Dial Up, are computerized development, Got application interlinked HP terminals, Epson, HP, xp, N.T, Linus organizational DSL from consultants Printronix printers systems 10 PECO 1976 1990 All business applications In House No standard N.A All systems are IBM As/400, Hp, IBM, DEL, Os/400, Cobol, All Dial Up, are computerized development, Got application interlinked HP terminals, Epson, HP, Windows NT, organizational from consultants Printronix printers RPG LE systems 11 Atlas Honda LTd 1992 1992 All business applications In House S.A.P 2003 All systems are IBM As/400, Hp, IBM, DEL, Os/400, Cobol, All Dial Up, are computerized development, Got interlinked HP terminals, Epson, HP, Windows NT, organizational DSL from consultants Printronix printers RPG LE systems 12 Pakistan Steel 1974 1985 All business applications In House No standard N.A All systems are IBM As/400, Hp, IBM, DEL, Os/400, Cobol, All Dial Up, are computerized development, Got application interlinked HP terminals, Epson, HP, Windows NT, organizational DSL from consultants Printronix printers RPG LE systems

xix Banking Sector IT Expenses/Income/Total Employee/IT Employee Annexure XXIII Foreign Banks

ABN Amro (Rs. 000) Bank of Tokyo (Rs. 000) S/No. Years Net income itexp Totemp itemp S/No. Years Net income Itexp totemp itemp 1 1990 18,991,000 41,623,000 50 3 1 1990 20,234,000 138,900 26 1 2 1991 49,775,000 45,241,000 55 4 2 1991 23,456,000 190,200 28 1 3 1992 86,081,000 47,985,000 64 4 3 1992 18,907,000 214,140 29 2 4 1993 133,509,000 55,421,000 80 5 4 1993 29,700,000 231,400 29 2 5 1994 152,411,000 57,524,000 115 6 5 1994 31,789,000 250,800 30 2 6 1995 10,992,000 62,451,000 131 6 6 1995 29,450,000 245,900 33 2 7 1996 147,524,000 68,541,000 160 7 7 1996 25,357,000 240,000 34 2 8 1997 334,910,000 76,584,000 197 7 8 1997 24,442,000 1,348,000 39 2 9 1998 225,128,000 81,452,000 226 8 9 1998 136,607,000 1,766,000 54 2 10 1999 294,369,000 87,542,000 275 10 10 1999 165,666,000 5,582,000 60 4 11 2000 436,400,000 94,652,000 282 12 11 2000 79,357,000 352,000 66 4 12 2001 732,458,000 152,840,000 281 16 12 2001 155,516,000 1,087,000 55 4 13 2002 1,025,540,000 157,991,000 272 17 13 2002 27,720,000 1,106,000 43 3 14 2003 806,197,000 155,846,000 270 17 14 2003 20,322,000 688,000 35 3 15 2004 714,020,000 137,727,000 322 20 15 2004 33,645,000 4,842,000 38 3

Deutsche(Rs. 000) HSBC(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income Itexp totemp itemp 1 1990 24,709,000 369,000 60 2 1 1990 -61,607,000 320,000 120 2 2 1991 2,757,000 675,000 60 2 2 1991 36,469,000 670,000 130 3 3 1992 27,153,000 967,420 62 3 3 1992 35,894,000 790,500 134 3 4 1993 2,747,000 963,200 62 2 4 1993 14,461,000 940,600 135 4 5 1994 92,612,000 1,023,000 65 3 5 1994 14,163,000 1,102,500 136 3 6 1995 1,568,000 1,265,300 65 3 6 1995 -162,512,000 1,371,000 136 3 7 1996 72,831,000 1,263,500 68 3 7 1996 14,453,000 1,790,000 149 3 8 1997 79,738,000 1,375,000 70 3 8 1997 37,182,000 2,174,000 184 3 9 1998 -40,693,000 5,623,000 70 3 9 1998 -10,959,000 2,188,900 191 3 10 1999 46,437,000 6,652,000 70 4 10 1999 602,000 11,482,000 202 4 11 2000 -16,734,000 9,306,000 71 3 11 2000 -132,598,000 1,634,000 124 4 12 2001 -19,095,000 9,770,000 72 3 12 2001 70,041,000 4,799,000 129 4 13 2002 119,783,000 15,609,000 73 3 13 2002 88,759,000 4,092,000 128 5 14 2003 -33,901,000 8,945,000 73 3 14 2003 231,056,000 5,861,000 125 5 15 2004 400,000 11,419,000 75 3 15 2004 58,415,000 5,380,000 133 6

xx HBL Zurich(Rs. 000) Citi Bank(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income Itexp totemp itemp 1 1990 20,453,000 963,000 151 9 1 1998 -227,483,000 59,278,000 575 60 2 1991 101,780,000 876,000 149 12 2 1999 -331,168,000 61,754,000 580 62 3 1992 223,877,000 10,015,000 153 14 3 2000 384,307,000 72,708,000 587 65 4 1993 240,352,000 10,855,000 169 11 4 2001 880,000,000 83,122,000 606 65 5 1994 250,783,000 10,555,000 196 15 5 2002 1,063,698,000 83,621,000 837 67 6 1995 276,531,000 10,728,000 225 15 6 2003 1,322,680,000 96,574,000 911 71 7 1996 355,299,000 12,228,000 251 14 7 2004 1,969,547,000 218,317,000 636 75

8 1997 431,984,000 22,086,000 313 12 9 1998 408,469,000 21,517,000 290 12 10 1999 406,331,000 23,072,000 287 14 11 2000 407,193,000 23,054,000 369 14 12 2001 406,514,000 21,638,000 394 16 13 2002 375,223,000 23,874,000 448 18 14 2003 429,422,000 31,210,000 542 21 15 2004 511,117,000 32,803,000 648 23

Standard Chartard(Rs. 000) Oman Bank(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1999 162,285,000 44,415,000 296 16 1 1996 -11,440,000 1,924,000 22 1 2 2000 40,590,000 102,661,000 330 21 2 1997 2,945,000 2,649,000 20 1 3 2001 355,104,000 114,658,000 278 12 3 1998 -38,211,000 2,594,000 31 2 4 2002 1,037,502,000 144,268,000 594 19 4 1999 -7,753,000 1,216,000 33 2 5 2003 1,887,728,000 5 2000 -40,154,000 1,100,000 31 2 180,658,000 631 18 6 2001 -11,821,000 931,000 26 2 6 2004 2,485,141,000 201,004,000 728 17 7 2002 -9,194,000 783,000 29 2 8 2003 -5,660,000 837,000 19 2 9 2004 -6,244,000 600,000 21 2

Local Banks Bank Al Habib(Rs. 000) xxi Allied Bank Limited(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1991 7,687,000 670,000 67 7 1 1990 20,174,000 1,833,000 11,240 25 2 1992 24,714,000 754,000 210 9 2 1991 33,044,000 5,244,000 10,900 31 3 1993 96,413,000 988,400 470 9 3 1992 142,310,000 4,940,000 10,690 37 4 1994 106,935,000 1,245,000 501 10 4 1993 79,587,000 20,420,000 10,690 45 5 1995 127,446,000 1,480,300 525 10 5 1994 88,066,000 19,052,000 10,700 46 6 1996 152,960,000 1,490,200 565 12 6 1995 145,528,000 7,924,000 10,500 49 7 1997 198,644,000 1,523,000 575 13 7 1996 69,869,000 28,227,000 9,600 52 8 1998 203,122,000 1,612,000 580 15 8 1997 13,664,000 19,490,000 9,500 56 9 1999 152,728,000 1,893,000 583 15 9 1998 19,592,000 26,713,000 8,900 59 10 2000 153,178,000 25,236,000 584 15 10 1999 10,544,000 124,751,000 7,010 62 11 2001 246,006,000 9,939,000 742 20 11 2000 -4,841,806,000 42,351,000 7,089 63 12 2002 289,726,000 133,479,000 1,007 35 12 2001 -1,122,065,000 99,592,000 6,960 72 13 2003 1,012,309,000 176,394,000 1,253 35 13 2002 -1,069,257,000 65,898,000 6,965 75 14 2004 541,011,000 222,303,000 1,462 40 14 2003 385,580,000 119,170,000 6,970 79 15 2004 191,773,000 203,356,600 6,976 81 First Women Bank(Rs. 000) S/No. Years Net income itexp totemp itemp 1 1990 263,000 745,000 104 3 Bank of Punjab(Rs. 000) 2 1991 3,035,000 865,000 198 6 S/No. Years Net income Itexp totemp itemp 3 1992 8,585,000 2,060,000 295 6 4 1993 15,700,000 2,627,000 244 7 1 1990 55,930,000 110,000 483 4 5 1994 12,827,000 2,292,000 309 7 2 1991 145,030,000 111,000 957 5 3 1992 313,650,000 119,800 1,390 5 6 1995 19,875,000 2,444,000 310 8 4 1993 354,450,000 224,500 1,705 5 7 1996 -129,834,000 3,050,000 353 8 5 1994 229,270,000 212,300 2,501 6 8 1997 826,000 2,595,000 331 8 9 1998 20,673,000 3,635,000 314 8 6 1995 174,070,000 120,000 2,924 7 10 1999 -64,833,000 4,001,000 467 8 7 1996 151,450,000 1,860,000 3,358 21 11 2000 41,493,000 4,821,000 484 8 8 1997 162,910,000 3,120,000 3,366 31 9 1998 123,120,000 3,130,000 3,304 30 12 2001 101,156,000 4,450,000 484 7 10 1999 28,240,000 3,260,000 3,229 26 13 2002 45,407,000 5,203,000 496 9 11 2000 157,420,000 3,500,000 3,110 26 14 2003 160,579,000 21,987,000 524 10 12 2001 236,250,000 39,070,000 3,063 26 15 2004 124,324,000 17,262,000 507 11 13 2002 283,970,000 93,420,000 3,000 34 14 2003 689,180,000 62,350,000 3,019 33 15 2004 368,170,000 45,820,000 3,144 36

xxii

Muslim Commercial Bank(Rs. 000) National Bank of Pakistan(Rs. 000) S/No. Years Net income Itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1990 38,483,000 6,580,000 12,904 60 1 1990 221,124,000 105,000 21,004 . 2 1991 66,725,000 7,890,000 13,031 62 2 1991 735,999,000 947,000 20,657 . 3 1992 113,997,000 9,400,000 12,792 65 3 1992 812,746,000 1,078,000 20,816 . 4 1993 146,228,000 10,540,000 13,768 67 4 1993 2,407,912,000 1,764,000 20,694 . 5 1994 252,622,000 12,560,000 13,892 68 5 1994 607,811,000 9,171,000 20,111 . 6 1995 370,715,000 12,986,000 14,522 70 6 1995 681,523,000 52,963,000 21,549 . 7 1996 103,288,000 13,698,700 14,729 72 7 1996 -795,273,000 71,439,000 23,730 . 8 1997 238,782,000 17,600,000 13,610 72 8 1997 61,683,000 114,232,000 18,096 . 9 1998 399,180,000 48,963,000 12,858 72 9 1998 529,653,000 176,069,000 15,785 . 10 1999 568,950,000 98,008,900 12,557 74 10 1999 -177,062,000 379,346,000 15,541 . 11 2000 734,729,000 125,521,000 13,133 79 11 2000 461,227,000 114,272,000 15,351 . 12 2001 1,108,176,000 146,841,000 11,614 85 12 2001 1,148,529,000 170,910,000 15,163 . 13 2002 1,738,594,000 138,072,000 10,926 101 13 2002 2,253,385,000 191,905,000 12,195 . 14 2003 2,230,145,000 189,985,000 10,164 121 14 2003 4,198,103,000 338,215,000 13,272 . 15 2004 2,539,994,000 183,454,000 9,889 122 15 2004 6,242,929,000 417,740,000 13,745 .

Metro Bank(Rs. 000) Askari Bank(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income Itexp totemp itemp 1 1992 4,947,000 217,000 64 2 1 1992 6,260,000 333,000 240 14 2 1993 64,040,000 699,000 104 4 2 1993 118,508,000 2,712,000 326 30 3 1994 80,466,000 2,592,000 193 8 3 1994 145,201,000 3,814,000 465 67 4 1995 93,829,000 7,005,000 271 9 4 1995 173,084,000 7,446,000 664 87 5 1996 152,145,000 6,829,000 312 10 5 1996 238,361,000 11,449,000 796 98 6 1997 178,952,000 7,327,000 398 11 6 1997 310,670,000 19,127,000 946 102 7 1998 201,002,000 8,578,000 428 11 7 1998 359,134,000 31,931,000 996 110 8 1999 196,710,000 9,542,000 450 12 8 1999 282,446,000 34,272,000 1,001 113 9 2000 225,658,000 10,276,000 494 12 9 2000 315,588,000 40,237,000 1,147 114 10 2001 334,695,000 11,468,000 561 12 10 2001 550,051,000 46,287,000 1,281 118 11 2002 429,669,000 18,756,000 763 13 11 2002 686,994,000 60,026,000 1,456 120 12 2003 678,479,000 25,861,000 901 19 12 2003 1,103,065,000 73,806,000 1,723 123 13 2004 815,539,000 31,970,000 1,045 24 13 2004 1,923,040,000 93,217,000 2,118 125

xxiii Manufacturing Sector IT Expenses/Income/Total Employee/IT Employee

Atlas Honda(Rs. 000) D.G Cement(Rs. 000) S/No. Years Net income Itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1990 16,257,000 6,658,000 . . 1 1990 81,961,000 5,580,000 550 8 2 1991 -10,475,000 10,194,000 . . 2 1991 92,618,000 5,987,000 572 8 3 1992 -338,000 11,212,000 . . 3 1992 82,543,000 6,660,000 580 9 4 1993 13,388,000 11,211,000 . . 4 1993 296,134,000 7,376,000 582 9 5 1994 11,443,000 11,973,000 . . 5 1994 362,884,000 10,447,000 583 10 6 1995 10,318,000 12,243,000 . . 6 1995 386,788,000 14,462,000 590 10 7 1996 101,454,000 17,769,000 . . 7 1996 248,411,000 22,580,000 595 12 8 1997 124,944,000 23,491,000 . . 8 1997 71,454,000 53,443,000 600 12 9 1998 125,641,000 24,851,000 . . 9 1998 -58,284,000 37,382,000 610 12 10 1999 123,394,000 30,269,000 1,011 10 10 1999 -580,369,000 45,265,000 634 13 11 2000 60,182,000 21,550,000 1,200 14 11 2000 -101,199,000 45,314,000 660 14 12 2001 117,777,000 32,110,000 1,250 16 12 2001 -444,004,000 70,628,000 673 14 13 2002 270,500,000 20,190,000 1,275 12 13 2002 279,868,000 74,063,000 677 14 14 2003 427,400,000 23,832,000 1,280 15 14 2003 483,592,000 80,425,000 692 15 15 2004 544,700,000 27,927,000 1,300 16 15 2004 794,493,000 92,757,000 705 15

General Tyre(Rs. 000) Lakson(Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1990 8,826,000 1,210,000 936 7 1 1990 15,380,000 2,510,000 . . 2 1991 49,631,000 1,471,000 948 7 2 1991 11,420,000 2,795,000 4,560 18 3 1992 66,102,000 1,547,000 963 8 3 1992 21,510,000 2,847,000 4,570 18 4 1993 58,102,000 1,621,000 970 8 4 1993 30,318,000 4,765,000 4,590 20 5 1994 30,460,000 1,631,000 981 8 5 1994 65,154,000 6,859,000 4,595 20 6 1995 24,454,000 1,672,000 982 9 6 1995 42,500,000 8,979,000 5,010 22 7 1996 9,038,000 1,680,000 990 9 7 1996 48,120,000 10,357,000 5,034 22 8 1997 2,563,000 1,710,000 1,011 9 8 1997 89,758,000 24,786,000 5,048 23 9 1998 74,647,000 1,750,000 1,035 10 9 1998 150,324,000 38,974,000 5,053 23 10 1999 102,139,000 1,771,000 1,045 10 10 1999 180,385,000 53,543,000 5,060 25 11 2000 199,984,000 1,854,000 1,011 10 11 2000 474,653,000 38,734,000 5,074 25 12 2001 189,154,000 2,192,000 1,002 10 12 2001 394,708,000 43,782,000 5,084 27 13 2002 175,469,000 2,251,000 994 11 13 2002 749,023,000 54,066,000 5,090 27 14 2003 197,687,000 2,409,000 997 12 14 2003 856,783,000 60,805,000 5,093 28 15 2004 1,277,744,000 95,887,000 6,010 30

15 2004 236,000,000 2,458,000 989 12

xxiv Packages Limited (Rs. 000) Service Industries (Rs. 000) S/No. Years Net income itexp totemp itemp S/No. Years Net income Itexp totemp itemp 1 1990 108,936,000 2,000,000 2,800 8 1 1990 21,741,000 252,000 4,050 8 2 1991 128,228,000 2,500,000 2,810 8 2 1991 27,257,000 310,000 4,056 9 3 1992 175,948,000 2,600,000 2,820 9 3 1992 32,976,000 296,000 4,560 10 4 1993 224,744,000 2,800,000 2,805 9 4 1993 41,386,000 644,000 4,616 11 5 1994 238,783,000 2,700,000 2,809 9 5 1994 42,576,000 1,132,000 4,721 12 6 1995 150,318,000 2,500,000 2,850 8 6 1995 44,813,000 811,000 4,819 12 7 1996 153,503,000 1,075,000 2,860 10 7 1996 47,668,000 1,364,000 4,981 14 8 1997 90,385,000 1,095,000 2,865 11 8 1997 22,635,000 1,496,000 5,012 16 9 1998 220,079,000 2,000,000 2,885 11 9 1998 123,738,000 1,677,000 5,017 21 10 1999 384,154,000 2,000,000 2,900 15 10 1999 29,902,000 1,788,000 5,024 22 11 2000 428,703,000 1,058,000 2,940 16 11 2000 31,143,000 2,562,000 5,190 23 12 2001 424,879,000 5,001,880 2,950 15 12 2001 67,710,000 2,939,000 5,209 26 13 2002 655,372,000 6,802,000 2,965 15 13 2002 47,227,000 2,239,000 5,700 28 14 2003 813,513,000 5,902,600 2,970 12 14 2003 8,832,000 3,652,000 5,790 30 15 2004 963,202,000 1,432,000 3,000 11 15 2004 26,902,000 3,911,000 5,970 30

Indus Motors(Rs. 000) Honda Cars(Rs. 000) S/No. Years Net income Itexp totemp itemp S/No. Years Net income itexp totemp itemp 1 1992 94,272,000 4,507,000 670 5 1 1994 20,986,947 1,000,000 1,140 4 2 1993 84,478,000 7,546,000 771 5 2 1995 86,424,753 600,000 1,142 5 3 1994 121,545,000 11,986,000 850 5 3 1996 201,170,033 420,000 1,145 4 4 1995 51,721,000 14,084,000 960 6 4 1997 48,065,001 710,000 1,150 4 5 1996 187,235,000 14,830,000 990 9 5 1998 158,179,106 900,000 1,190 6 6 1997 150,204,000 25,124,000 1,110 11 6 1999 207,692,154 640,000 1,371 5 7 1998 147,164,000 2,544,800 1,250 12 7 2000 191,285,533 650,000 1,200 4 8 1999 251,289,000 43,154,000 1,340 12 8 2001 204,471,222 2,762,500 1,131 5 9 2000 172,254,000 45,587,000 1,461 13 9 2002 431,642,000 5,772,000 1,250 5 10 2001 203,370,000 90,116,000 1,631 14 10 2003 346,135,000 6,452,000 1,190 5 11 2002 360,463,000 91,329,000 1,890 14 11 2004 464,230,000 5,127,800 1,200 5

12 2003 1,257,761,000 94,219,000 1,970 14 13 2004 1,473,242,000 87,065,000 2,005 15

xxv

I.C.I Pakistan (Rs. 000) Pak Suzuki(Rs. 000) S/No. Years Net income(Rs) itexp(Rs) totemp itemp S/No. Years Net income(Rs) itexp(Rs) totemp itemp 1 1990 202,440,000 101,780,000 4310 8 1 1990 143,606,000 5,297,000 1,420 7 2 1991 250,968,000 115,522,000 4370 8 2 1991 167,882,000 6,310,000 1,450 7 3 1992 281,724,000 124,491,000 4410 9 3 1992 -528,206,000 8,525,000 1,470 8 4 1993 389,018,000 140,463,000 4460 9 4 1993 -240,990,000 7,984,000 1,490 8 5 1994 519,523,000 160,435,000 4490 10 5 1994 -296,577,000 7,080,000 1,510 8 6 1995 589,479,000 184,288,000 4,520 10 6 1995 -5,918,000 6,989,000 1,512 8 7 1996 542,017,000 219,058,000 4,631 13 7 1996 574,502,000 15,295,000 1,514 9 8 1997 116,534,000 265,673,000 4,640 13 8 1997 391,390,000 19,919,000 1,540 10 9 1998 -2,144,290,000 334,791,000 4,677 15 9 1998 357,753,000 20,363,000 1,550 11 10 1999 -3,810,235,000 392,395,000 4,682 16 10 1999 263,347,000 17,721,000 1,551 11 11 2000 -1,750,330,000 389,976,000 4,691 16 11 2000 -26,600,000 19,420,000 1,552 11 12 2001 566,618,000 412,486,000 4,693 17 12 2001 87,013,000 19,921,000 1,570 12 13 2002 1,854,732,000 732,281,000 4,710 17 13 2002 850,097,000 25,095,000 1,580 13 14 2003 766,244,000 472,756,000 4,713 17 14 2003 1,570,191,000 27,672,000 1,590 14 15 2004 978,422,000 502,451,000 4,723 18 15 2004 1,685,292,000 29,370,000 1,600 14

Pakistan Tobacco Company (Rs. 000) Siemens Pakistan(Rs. 000) S/No. Years Net income(Rs) itexp(Rs) totemp Itemp S/No. Years Net income(Rs) itexp(Rs) totemp itemp 1 1990 127,000,000 17,029,000 4,680 40 1 1990 13,460,000 28,935,000 1,890 15 2 1991 -159,848,000 20,062,000 4,790 43 2 1991 25,831,000 36,007,000 1,897 15 3 1992 197,000,000 23,989,000 4,999 43 3 1992 80,922,000 51,708,000 1,920 17 4 1993 158,000,000 25,747,000 5,467 46 4 1993 108,855,000 58,513,000 1,940 18 5 1994 104,000,000 39,900,000 5,487 50 5 1994 104,848,000 71,104,000 1,945 22 6 1995 -243,540,000 49,170,000 5,493 62 6 1995 192,528,000 85,390,000 1,950 23 7 1996 -58,926,000 62,502,000 5,510 62 7 1996 228,665,000 107,117,000 1,963 25 8 1997 -268,097,000 84,219,000 5,530 64 8 1997 220,608,000 121,643,000 1,976 28 9 1998 -308,361,000 103,357,000 5,539 64 9 1998 219,606,000 148,410,000 1,984 30 10 1999 683,126,000 113,265,000 5,555 73 10 1999 114,173,000 182,433,000 1,999 35 11 2000 547,427,000 121,564,000 5,570 74 11 2000 266,521,000 196,302,000 2,045 35 12 2001 353,704,000 170,170,000 5,590 75 12 2001 253,887,000 210,462,000 2,046 37 13 2002 420,303,000 212,499,000 6,011 75 13 2002 390,882,000 247,491,000 2,140 38 14 2003 321,081,000 246,399,000 6,019 80 14 2003 616,919,000 250,499,000 2,160 38 15 2004 424,071,000 249,244,000 . . 15 2004 412,562,000 282,806,000 2,190 40

xxvi

Uniliver Pakistan(Rs. 000) Racket Bankiser Pakistan(Rs. 000) S/No. Years Net income(Rs) itexp(Rs) totemp Itemp S/No. Years Net income(Rs) itexp(Rs) totemp itemp 1 1990 256,874,000 37,000,000 1120 12 1 1999 -215,670,000 1,654,900 454 5 2 1991 389,117,000 46,180,000 1170 12 2 2000 12,208,000 2,231,000 370 4 3 1992 391,013,000 61,980,000 1195 11 3 2001 79,051,000 3,257,000 330 4 4 1993 472,660,000 107,796,000 1210 9 4 2002 166,212,000 5,460,000 335 4 5 1994 225,610,000 146,328,000 1230 9 5 2003 124,335,000 26,011,000 331 3 6 1995 325,400,000 176,250,000 1285 9 6 2004 393,877,000 3,652,000 330 3 7 1996 523,210,000 290,717,000 1310 9 8 1997 556,564,000 312,450,000 1,325 8 9 1998 738,329,000 461,180,000 1,325 8 L.G Pakistan (Rs. 000) 10 1999 763,960,000 36,033,000 1,330 9 S/No. Years Net income(Rs) itexp(Rs) totemp itemp 11 2000 1,339,114,000 51,883,000 1,334 9 1 1995 8,684,000 132,000 1,371 10 12 2001 1,223,000,000 57,852,000 1,338 9 2 1996 10,451,000 60,000 1,140 12 13 2002 1,749,563,000 73,255,000 1,342 10 3 1997 -51,836 415,000 1,130 14 14 2003 1,599,332,000 81,690,000 1,346 10 4 1998 7,388,000 782,000 1,401 16 15 2004 1,924,943,000 109,394,000 1,348 10 5 1999 4,776,000 421,000 1,300 14 6 2000 7,438,000 1,068,000 1,260 11 7 2001 2,023,000 994,000 1,390 10 Bata Pakistan(Rs. 000) 8 2002 15,636,000 3,901,000 1,380 15 S/No. Years Net income(Rs) itexp(Rs) totemp itemp 9 2003 24,328,000 5,870,000 1,400 20 1 1997 686,000 7,000,000 3,387 12 10 2004 144,049,000 5,572,000 1,486 22

2 1998 -124,336,000 6,000,000 3,156 10 3 1999 33,954,000 9,000,000 3,171 9 4 2000 46,539,000 10,000,000 3,129 9 5 2001 68,377,000 11,000,000 3,251 9 6 2002 47,282,000 1,200,000 3,322 9 7 2003 88,501,000 13,091,000 3,277 9 8 2004 121,872,000 16,686,000 3,265 9

xxvii

Results Summary of One-Sample z –Test Annexure XXIV

IT Success Reason-Top Management Commitment IT Success Reason-Organization Proper IT Planning

Sector n πˆ z-statistic p-value Sector n πˆ z-statistic p-value All Banking & Manufacturing 48 0.979 23.00 0.000 All Banking & Manufacturing 48 0.791 4.92 0.000 Banking 24 1.000 Infinity 0.000 Banking 24 0.750 2.77 0.005 Manufacturing 24 0.958 11.00 0.00 Manufacturing 24 0.833 4.29 0.000 Local Banks 12 1.000 Infinity 0.000 Local Banks 12 0.667 1.17 0.133 Foreign Banks 12 1.000 Infinity 0.000 Foreign Banks 12 .833 2.97 0.006 Local Manufacturing 12 0.650 Infinity 0.000 Local Manufacturing 12 .833 2.97 0.006 Foreign Manufacturing 12 .9167 5.00 0.000 Foreign Manufacturing 12 .833 2.97 0.006

IT Success Reason-Organization Proper IT Investments IT Success Reason-Government Role

Sector N πˆ z- p-value Sector n πˆ z-statistic p-value statistic All Banking & 48 0.292 -3.14 0.999 All Banking & 48 0.750 3.96 0.000 Manufacturing Manufacturing Banking 24 0.917 -1.70 0.948 Banking 24 0.583 0.81 0.213 Manufacturing 24 0.250 -2.77 0.995 Manufacturing 24 0.917 7.23 0.000 Local Banks 12 0.333 -1.70 0.867 Local Banks 12 0.500 0.00 .5000 Foreign Banks 12 0.333 -1.70 0.867 Foreign Banks 12 .667 1.17 0.133 Local Manufacturing 12 .0833 -5.00 1.000 Local Manufacturing 12 .917 5.00 0.000 Foreign 12 .4170 -0.56 0.707 Foreign Manufacturing 12 .917 5.00 0.000 Manufacturing

xxviii

Results Summary of One-Sample z –Test Annexure XXV

Organizational Measure For IT Success: Rewards Organizational Measure For IT Success: Job Threats Sector N πˆ z-statistic p-value Sector N πˆ z-statistic p-value All Banking & Manufacturing 48 0.750 3.96 0.000 All Banking & Manufacturing 48 0.125 -7.77 1.000 Banking 24 0.663 4.81 0.000 Banking 24 0.208 -3.44 0.999 Manufacturing 24 0.917 7.23 0.000 Manufacturing 24 0.0417 -11.00 1.000 Local Banks 12 0.300 0.00 0.060 Local Banks 12 0.250 -1.91 0.959 Foreign Banks 12 .767 4.17 0.000 Foreign Banks 12 0.167 -2.97 0.994 Local Manufacturing 12 .246 2.29 0.052 Local Manufacturing 12 0.165 -2.94 0.993 Foreign Manufacturing 12 .917 5.00 0.000 Foreign Manufacturing 12 0.0833 -5.00 1.000

Questionnaire Annexure xxvi ======1. Name of company:______2. Origin:______3. Year of Starting Business in Pakistan:______4. Main Areas of Business:______5. Address Of Corporate office: ______6. Name of the Interviewee:______7. Designation:______8. Duration of your service in the company:______9. For how long your company is using I.T:______10. What is total staff strength of your company:______11. What is staff strength of your IT people:______12. How many out of your total management staff are?: (Pl. provide no.) 1. Business degree Holder 2. Engineering degree Holder 3. Computer Science degree Holder 4. Any other degree Holder

13. What functions I.T department plays in your organization: (Pl tick) a. Programming, system Development & maintenance b. Manage Telecommunication (Internet, Intranet etc.) c. Processing of business applications d. Helps in strategy formulation/organization transformation e. Helps in Innovation of product & service f. Helps in Business Process Reengineering g. For all of above 14. In which application areas of your company IT has been introduced?: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 15. Which of above areas/ systems are interlinked? 1. 2. 3. 4. 5. 16. The above systems are used mostly for: Planning Organizing Leading Controlling All of these:

xxix 17. What is level of integration of your IT systems & in which year you got this level?; Pl. Tick Year 1995- 1997-1999 1999-2001 2001-2003 2003-2005 1997 1 Office Applications Stand Stand Stand Stand Stand Alone Alone Alone Alone Alone (Word-processing Connected Connected Connected Connected Connected Spread sheets etc) within dept within dept within dept within dept within dept Within Within Within Within Within company company company company company With With With With With competitor competitor competitor competitor competitor With With With With With stakeholder stakeholder stakeholder stakeholder stakeholder 2 Business Process Stand Stand Stand Stand Stand Alone Alone Alone Alone Alone Systems (Payroll, Connected Connected Connected Connected Connected Inventory, Accounting within dept within dept within dept within dept within dept Production, A/c Within Within Within Within Within Maintenance). Etc. company company company company company With With With With With competitor competitor competitor competitor competitor With With With With With stakeholder stakeholder stakeholder stakeholder stakeholder 3 Telecommunication Stand Stand Stand Stand Stand Alone Alone Alone Alone Alone Systems(Intranet, Connected Connected Connected Connected Linked Internet, ATMs, E- within dept within dept within dept within dept within dept Commerce etc.) Within Within Within Within Within company company company company company With With With With With competitor competitor competitor competitor competitor With With With With With stakeholder stakeholder stakeholder stakeholder stakeholder

18. What information system level out of following do you think your company have achieved so far?

1. Executive Support Systems 2. Decision Support systems 3. Management Information systems 4. Transaction processing systems 5. All of above

xxx 19. What Hardware system your organization is using? Pl. Tick:

a. Main frames b. Mini computer c. Mid range servers d. P.C networking LAN, WAN, etc e. Combination of any two above

20. What Operating system you are using?. 1.______2.______3.______

21. Which software package/language you are using for programming/systems?. 1.______2.______3.______

22. How you developed your IT systems(Pl. tick)?;

1. Vendor supplied 2. Purchased standard system from Market. 3. Developed In-house by own 4. Got developed from consultants 5. Got copy from different sources 6. Combination of any of above Note: If you are using standard system please name that:______

23. Do your present I.T systems meet your all requirements Yes No

24. If ‘Yes’ at what extent of requirements out of followings ? (Pl. tick) a) All systems have been computerized and meet all requirements b) Most systems have been computerized & Few systems are left. c) Still use manual procedures for some reports of computerized systems

xxxi

25. If ‘N o’ what are the reasons. a. Hardware does not meet requirements b. Software does not meet requirements c. Top Management is not supportive d. Employees are not cooperative e. Other working hazards

26. On what basis you update your I.T systems: 1. As the need arise (Requirement changes) 2. As technology changes 3. Competitor pressure 4. All of above 27. What, When and How you normally updated your systems during last ten years 1995-1996 1996-1998 1998-2000 2000-2002 2002-2004 2005 1 Installed total New Hardware 2 Installed total New Software 3 Installed New Operating system 4 Made Modification in software 5 Made certain changes in Hardware 6 Installed New Standard Application 7 Made no changes

28. Are you satisfied with the quality of Hardware you procured Yes No.

29. If ‘No’ what are the reasons: 1.______2.______3.______30. Are you satisfied with the quality of Software you procured or developed Yes No 31. If ‘No’ what are the reasons: 1.______2.______3.______

xxxii 32. Are you satisfied with the quality of people working on your IT systems Yes No

33. If ‘No’ what out of following reasons you think are those: 1. Qualified staff is not available 2. Recruitment of staff is not up to Mark 3. Proper Training is not provided to the employees by the organization 4. Employees are not properly motivated by the organization 5. Any other reason:______34. How do you compare your I.T systems with those of your competitors? 1. Much better and offer many advantages 2. As good as their system. 3. Inferior to their system 4. No information about their

35. At what level any new IT related system installation decisions are made: a. Corporate level b. Regional level c. Branch/Unit level

36. Who makes your company’s computerization decisions: a. Top Management b. Any I.T committee c. Departmental/Divisional Heads d. I.T department e. Any other please name

37. To what extent do you think concerned manager or employee (User of a system ) are involved in yours’ company computerization decisions?

a) Involved only in 1st phase of system development life cycle b) Involved in all phases of system development life cycle c) Do not involved in any phase.

38. Do you provide your staff any training for using IT systems?. Yes No

xxxiii 39. If ‘Yes’ What type out of following; 1. On the Job 2. Off the Job but within company 3. Off the Job outside company

40. How frequently you provide them training? a. On Yearly basis b. On Quarterly basis c. On Need basis d. Only once when employee is firstly appointed. 41. Do you allocate any budget to this training? Yes No 42. If “Yes” what %age of your annual budget (or What Amount)?.

43. IT is accepted by your employees in your organization because it was;

a. Easier to use b. Has relative advantage c. Has simple process d. Is less risky e. Is compatible with other systems f. Give competitive edge g. Low Cost h. More efficient/productive i. All of above

44. What impacts the following have on your employees on acceptance of IT in your organization?

a. Intrinsic rewards such as Low Impact Moderate Impact High Impact A Ease of Use B Usefulness C Enjoyment

xxxiv b. External factors such as Low Impact Moderate Impact High Impact a Social Pressure b Organizational Pressure 45. Please indicate any other five reasons in order of their importance, which were supportive in the way of adoption & implementation of I.T in your organization. 1.______2.______3.______4.______5.______46. How much approximate investment your organization has made so far in I.T. a. Investments in Hardware b. Investments in Software c. Investment in Human resources d. Investment in setting up I.T department (Furniture & Fixture) e. Cost of being on line (Internet, Telephone etc.) f. Operational expenses. g. Total Investments (a to f) (Please provide year wise detail on separate sheet from 1990-2005) 47. In what areas your company’s IT investments are more focused; 1. Customer related areas (Customer services, Sale order processing etc.) 2. Back office areas(Traditional accounts, inventory, Payroll etc.) 3. All of above 48. Do you allocate IT expenses in budget or incur as need come: Budget Need 49. Do you think that I.T investments have yielded the expected returns? Yes No 50. If ‘Yes’ return in term of; (Please provide year wise data from 1995-2005. a) Below 10% 10-30% 30-50% 50-70% 70-90% 90-100% A Increased Net Profit B Increased Asset Turn Over C Increased Inventory Turn Over D Increased Return on Equity E Increased Earning Per Share F Increased Market Share G Decreased no of Employees

xxxv b) NO MODERATE HIGH INCREASE INCREASE INCREASE H Customer Satisfaction I Stake Holder Confidence J Better Customer/Supplier Links K Better Data storage L Company Image M Job Interest of employees N Inter office link/communication

51. If ‘No’ what are the reasons: 1.______2.______3.______4.______5.______52. For what purpose you made your investments. (Pl. Tick) 1. Threshold IT (Just to Compete) 2. Informational IT (Information Access & Communication) 3. Traditional Investments (Cutting Cost) 4. Strategic Investments (Competitive Advantages) 5. All of Above 6. No Idea 52. If your organization has faced any of the following problems in way of adoption of IT Please indicate its impact. No Impact Low Impact Moderate Impact High Impact a Culture b Political c Human d Organizational e Governmental f Social g Economical h Environmental i Any other

xxxvi 53. What Measures you took to overcome these barriers? (Pl. Tick) 1. Education & Training 2. Employee Motivation 3. Employee Rewards 4. Job Threats 54. Please indicate any other five problems in order of their importance in way of adoption & implementation of I.T in your organization. (Pl. Tick). 1. Inadequate Telecommunication Infrastructure 2. Lack Of Adequate Employees 3. Lack Of Proper IT Planning 4. Selection of Computer to suit company needs 5.Judious use of computer 6. Management Unawareness about IT 7. Management shirks to investment money 8. Employees non cooperation 55. What security measures your company take?. a) For Data 1. Use Backups tapes/Diskettes 2. Use Backups Cds 3. Any other b) For Systems 1. Level restrictions to the user 2. System & User password 3. Both of above 56. What standby systems your company have if your I.T system do not work due to any reasons or it is totally collapses. 1.______2.______58. Are you satisfied with the role of Govt. in promoting I.T in the country: Yes No 59. If ‘No’, why you are dissatisfied; 1.______2.______3.______60. Any Other Comments you want to give on this questionnaire; ______*****************Thank You For Your Cooperation*******************

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