Organizational Routines and Digital Transformation

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1		Ibrahim Almatrodi	--	4257	2023-06-01 14:25:43	\|
2	format	Jason Zhu	-1 word(s)	4256	2023-06-05 03:34:11	\|

This entry is adapted from the peer-reviewed paper 10.3390/systems11050239

Digital transformation refers to the integration of digital technologies, such as data analytics and automation, into an organization, engendering changes in its work routines, processes, structure, and culture. However, digital transition is a strategic process involving significant structural and procedural changes in the shift from one technology to another. Therefore, understanding the effect of organizational routines is essential for understanding how digital transformation impacts an organization, and how best to manage this transition.

information systems organizational routines digital transformation

1. Introduction

Research shows that organizational routines such as habits and repetitive forms of action play a role in organizational life. However, research on how this influences the significant change caused by the adoption of technological systems in organizations is lacking in the current literature on information systems (ISs) and organizations. Researchers have employed a qualitative interpretive case study, undertaking semi-structured interviews with IS analysts, developers, implementers, and managers involved in digital transformation transition within a single university in Saudi Arabia.

The existing routines in an organization may not be compatible with the new digital environment, causing difficulties in integrating the new technology with the existing systems and processes. This can cause delays, errors, and other problems that can compromise the effectiveness of the new digital system. If an organization lacks the appropriate attitude to change, suitable digital routines, and appropriate structural changes, their efforts towards digital transformation will not be successful ^[1]. Moreover, some organizations may face difficulties in implementing sufficient organizational changes in their practices and work methods (routines) that enable them to fully reap the benefits of their digital initiatives ^[2]. Previous research indicates that failure rates associated with digital transformation range from 66% to 84% ^[3], hence understanding how to successfully manage the digital transition by dealing with the associated routines is crucial for preventing the failure of a digital transformation. Prior research reveals that unwritten cultural norms and formal organizational procedures have historically prevented organizational development, especially in the case of technological innovation that affects employees’ routines within an organization ^[4]. It has been demonstrated that developing a digital strategy, identifying enterprise boundaries, breaking down digital transformation processes into specific projects, and developing a unified digital infrastructure are crucial to the success of any digital transformation. However, due to engrained cultural norms, businesses frequently prefer to adhere to established routines, rejecting attempts to implement digital transformation ^[5]. This highlights the importance of understanding the impact played by organizational routines on digital transition, ensuring that a digital transformation is appropriately targeted.

Understanding the influences involved in the digital transformation transition can help identify aspects that must be avoided. Familiarity with such influence can improve the creation of strategies to deal with routines and enhance the understanding of both issues experienced by decision makers and how they may be addressed. Research (e.g., ^[6]^[7]^[8]^[9]) has shown that organizational routines influence the performance and behavior of employees, clarify power relationships, and enhance participation as well as managerial influence. The implementation of technology and digital transition can have an impact on existing routines, including the flexibility and the actors’ orientation.

2. Saudi Arabia Context

The objectives of Saudi Vision 2030 include the establishment of a digital government, improving the Saudi economy, and forming a dynamic digital society by moving and positioning countries as an internationally competitive information and communications technology center ^[10]. Many services, including those related to commerce, are earmarked to benefit from this shift.

Until recently, in Saudi Arabia, organizations have been largely centralized in terms of management and operations, including decision making, and automation has become the norm in many organizations. The Ministry of the Interior has presented excellent examples of how digital technologies, such as the web-based system and application “Absher,” changed existing routines and supported the automation of several services provided to citizens in a public organization. Services such as issuing passports, driving licenses, IDs, as well as visas for foreign workers, were automated by Absher ^[11]. Absher represents a strategic change in the Saudi government’s focus on advancing e-governance in the country ^[12]. As a large-scale project, it shows that digital technologies can improve services and contribute to organizational transformation. Information systems and technologies have similarly been introduced to higher education institutions to improve management, research, and teaching. As universities have unique routines, the current study aimed to document changes in routines attributed to digital transformation in a Saudi higher education institution. It does so by presenting a successful case study from the sector, which can support research in other sectors. Today, in Saudi Arabia, there is a growing trend towards the automation of many services, including higher education. Universities have a history of implementing digital technology to support academic and managerial functions. The country established a commission for artificial intelligence and data, reflecting the government’s plans to support the public sector with digital technology, which is expected to transform the way in which the government provides services to its citizens. This ambition is also reflected in public universities.

3. Inheritance of Infrastructure and Practices during Digital Transformation

Inherited routines constitute an aspect of workforce interactions with new technologies, because they operate in a manner comparable to that of genes in the human body. The behavioral theory of economic change reflects this. For example, the literature states that only knowledgeable actors can influence routines, either by creating new aspects or changing existing ones ^[13]^[14]^[15]. While implementing new technology, actors tend to transfer their previous practices (i.e., the experience of other technologies) to the performance of new routines ^[16]^[17]. Thus, their evolution can be observed by considering the influence of technology on user performance in the course of digital transformation. For example, an IT manager (DM4) stated:

“During the implementation of ERP, which took place years ago, it was clear that organizational routines had several influences, with one having a beneficial impact on users’ performance. Therefore, users tend to perform well when routines are transparent once adopted and are injected into the heart of the organization. This is because the knowledge of routines can make digital transformation a reality and more rapid process attainable as it directs users toward improved participation”.

Meanwhile, an analyst (A2) explained:

“Digital transformation is affected by previous systems implementations, as these practices, routines, and infrastructure move with us, and are used in arguments and [in the] efforts to adopt the new processes of digital transformation. These routines can impact the performance of the employees during the process in two ways, either positively or negatively”.

This can be interpreted and explained by the behavioral theory of economic change, as a main issue in the theory is the idea of the inheritance of routines, which plays a role in the development of such routines in the organization affected by technological systems. These inherited routines play a role in the change and in the move from one situation to another situation during the process of digital transformation.

However, routines can inhibit performance in the course of digital transformation, potentially because new routines tend to influence users’ ability to complete work, as a result of changing processes. This may be the case because individuals tend to avoid change, which can be tiring for organizational actors. For example, a systems analyst (A1) stated:

“In our efforts to implement an information system for a public organization, we put in tremendous effort to maintain our previous processes and work in the face of the benefits that digital transformation can bring to the organization, which can influence performance. We found that employees feared the prospect of change and that despite the new trends in technology, some preferred to continue working as they had done previously, rather than to learn new methods and skills. All this can restrict performance and digital transformation”.

Thus, organizational routines can influence the emergence of new processes in the course of digital transformation. The literature agrees that business processes form emergent organizational routines that are characterized, permitted, and forced by IT artifacts that are established in the course of functional-hierarchical decomposition and social design ^[18]. An information systems analyst (A1) stated:

“Organizational routines can be influenced by new processes that emerge as a result of digital transformation, thus changing routines accordingly”.

Organizational routines lead to flexibility in the course of digital transformation. The literature shows that companies that are stable and inflexible require organizational routines in order to evolve ^[19]. However, routines that promote flexibility ensure that new information systems follow certain rules and processes; however, they can potentially result in digital transformation leading to less organizational flexibility in turn. This shows that the evolution of routines is not always possible. One information system implementer, (IS2), stated:

“Previously, the traffic department experienced minor errors that the manager was able to address with the routine and rules. So yes, before this there were high levels of flexibility, but now the [Absher] system requires citizens to upload all the necessary papers, meaning that they have to provide exactly what is needed in order to complete their requests. However, automation results in less flexibility”.

As a developer (D2) noted:

“This issue of organizational flexibility tends to be true before the automation of some processes at the university, as there is a need to have the correct data in the systems. Without this it’s impossible to provide the service needed. So this kind of inflexibility of digital systems ensures the correctness of the data, and aims to reduce errors as much as possible”.

Behavioral theory posits that routines usually change and influence new practices and routines. However, regarding digital transformation and organizational routines, flexibility or inflexibility can be understood in the following way, as explained by project manager (PM1):

“I can answer this issue from two angles: one, organizational routines affect the participation in the digital transformation transitions by influencing, for example, decision-making regarding how to proceed and improve processes, and [how to] deal with managing change; second, it can be the case that if the organizational leadership improves processes, it enables the achievement of the potential of automation, for example at the university”.

4. Organizational Routines Impact on Performance and Change during Digital Transformation

Routines for completing organizational tasks can continue throughout the course of digital transformation transition, and may result in a change or confirmation, as an aspect of future transformation. This is contingent on the actors’ acceptance of how digital transformation should progress in order to confirm improvements in the operating atmosphere of the organization. This shows that the provision of incentives for workers and other personnel during digital transformation may cause routines to become constant with specific aims and goals. The literature supports the previous understanding of these factors. For example, Laumer et al. ^[20] study of the implementation of IS systems identified routines as having clear benefits, including the ability to exert strong influence on user resistance. It also demonstrated that the ease of adoption and use can also mediate user resistance. A systems developer (D2) stated:

“Organizational routines may influence and change user behavior either positively (supporting digital transformation), or negatively, depending on the nature of routines and the organization. We learned that once systems are implemented, we must understand their nature, especially processes that have been in place for a long time that expect certain behaviors from users. However, you encounter tremendous resistance to change, including attempting to convince you that new systems do not align with the existing rules. Still, in reality, this does not fit existing organizational routines”.

An IS implementer (IS3) explained:

“This can be relevant to digital transformation transition, where the behavior of the employees is impacted by the digital transformation. Some employees preferred the previous routines and were more relaxed, [but] if a practice they were familiar with [was affected], they might be threatened by the new systems, and raised a kind of resistance”.

A developer (D3) agreed regarding the fact that routines can influence behavior:

“Routines have the potential to change … the university [supported this by] influencing behavior and encouraging [staff] using various methods, such as providing incentives, which the university policy supported to encourage acceptance behavior”.

Organizational routines can be influenced by managerial actions in the course of digital transformation transition with the literature confirming that routines can facilitate change ^[21]. Additionally, existing routines (i.e., managerial actions) tend to influence digital transformation, which can, in turn, influence managerial actions, that is, to follow decisions and the benefits of automation on future change. According to a systems developer (D5):

“This question of how routines influence managerial action and change can be answered by identifying the relations between routines and managers, including whether it is one of power, productivity, competency, or strategy. Second, what changes can digital transformation bring to routines? Is the change related to automation or increased responsibilities? For example, if you see the relationship between the manager and the routine as one of power and find that the digital transformation will reduce his responsibilities and transfer them to higher managers, then the manager in danger of losing his authority will resist digital transformation. In contrast, if the manager sees routines and needs to get rid of them, then he can focus on strategic targets, which will result in a positive relationship with respect to digital transformation”.

Managerial actions and decisions regarding organizational routines play a role in digital transformation transition. For example, the support of such a project by leadership plays a role in modifying or accepting routines, and engenders understanding of how organizational change can be achieved, as demonstrated in the extant literature concerning organizational change ^[22].

This concluded that organizational routines influence actors’ orientation in the course of digital transformation, as confirmed by the literature, including Howard-Grenville ^[23], who showed that individuals and groups deal with routines using diverse intentions and orientations, proposing that an agency forms specific routine performances. A systems analyst (A5) stated:

“Organizational routines can influence an actor’s orientation in the course of digital transformation. This may be possible when routines are developed and improved based on an actor’s orientation within the organization as actors tend to keep or develop routines, particularly during a period of digital transformation”.

Routines both influence and have the potential to change actors’ orientation when there is a clear benefit for employees as a result of digital transformation. A user (E5) explained:

“There is a high possibility that organizational employees can have positive relationships with routines and may find them comforting. Thus, they have a positive influence on employees’ orientation. This means that digital transformation influences routines when it has a clear and useful result and can be beneficial to users’ interests. In such cases, a new routine can have a positive influence on actors’ orientation during digital transformation”.

Meanwhile, an implementer (IS4) observed:

“Support for digital transformation was demonstrated when the employees had a previous understanding of what technology can bring to a change, in the way they conducted their work, such as their normal routines. When their view [of the change] was positive, this supported the process of digital transformation”.

5. Organizational Routines Have the Potential to Be Adoptable during Digital Transformation

In the course of digital transformation transition, the performance of employees and actors enables the analysis of the influence of organizational routines. The adaptation of new approaches can serve as the principal reason for the acceptance of subsequent change. This may be the result of the possible influence of routines on organizational adaptation theories. This found that organizational routines influence stability and the adaptation to new technologies in the course of digital transformation transition, as supported by the literature. Feldman and Pentland ^[13] argued that routines can be a source of both change and stability and identified two relevant aspects: the ostensive (which represents the structure) and the performative (which represents the precise actions undertaken at specific times and places). They believed that the former allows actors to guide, explain, and suggest the exact performance of a routine, whereas the latter makes, preserves, and adapts the former. They also argued that the association of the ostensive and performative aspects confirms an extensive variety of consequences that range from stability to substantial change. A systems consultant and project manager (PM1) stated:

“Organizational routines can influence stability and the adaptation of change in the course of digital transformation. I remember, during the implementation of a major ERP in a public organization, routines tended to stabilize old processes. However, working and improving these processes and reflecting them in the ERP systems along with their use in the organization, implies that routines have the potential to adapt to changes during digital transformation”.

Meanwhile, a system implementer (IS3) explained:

“The adopting of technological systems by the university involved some of the processes and routines being adapted and stabilized with the new technology. An automation for the service of a disclaimer from the university, which used to be through a written application, signed by a huge group of people, … changed to make the service totally automated, which meant that the process was changed using technology, … [and] adapted. The means of adaptation to new routines depends on the nature of technological change, and how useful it is”.

This found that organizational routines tend to be influenced by new technologies in the course of digital transformation, as supported by the literature. Labatut et al. ^[24] showed that the development and implementation of a technology over an extended period of time, including placing greater emphasis on its disciplinary impact, has a relationship with any changes to organizational routines and players’ competences, which can result in novel actions. An information systems implementer (IS4) stated:

“Organizational routines may be influenced by new technologies that can create new processes and rules that will eventually improve or remove routines. New technologies impact organizational routines, which we can say mostly improve and adapt to new organizational routines”.

However, this also found that routines influence the process of digital transformation by altering automation and the distribution of responsibilities, thus potentially exerting considerable influence on adaptation. A systems developer (D3) explained:

“Technology generally leads to automation in an organization, and to decreased and increased responsibilities in particular jobs. It may also create new jobs with new responsibilities. For example, issuing a new or renewing an existing driving license in Saudi Arabia involved several processes. With digital upgrades and a web-based system called Absher, they have changed the process and reduced many managers’ responsibilities and decreased the need for some jobs, while also increasing the requirements for programmers. Many managers felt that their work had become easier because of the Absher system, and that the pressure of and time taken to finish work had also reduced”.

Developer (D2) noted:

“At the university, the new technologies, such as big data analytics, have changed the way [we] take decisions, which are now supported by real data. This means the routines concerning the ways the leadership take decisions are based on evidence. [This] changed the routines used for collecting data and information from the university departments, regarding, for example, quality matters. Now it is available any time and [it is] easier to get through the technological systems, which helps the university plan its management routines”.

6. Through the Role of Power, Actions That Play a Potential Role in the Success of Digital Transformation Can Be Understood

The engagement of players in organizations along with their power in the course of digital transformation can lead to change by incorporating their control over beneficial information and knowledge concerning routines and over how work should be completed. This influences the methods through which digital transformation can help an organization develop its routines. This found that organizational routines influence power relations in the course of digital transformation. The literature has concluded that ostensive and performative routines can shape power relations within organizations ^[25]. The arena in which routines function, along with the actors’ symbolic capital and position-taking throughout implementation can help routines influence initiatives for organizational change ^[23]. A systems consultant and project manager (PM1) stated:

“Organizational routines have an evident influence on power relations in the course of digital transformation. Those with greater familiarity can be in a powerful position to either support such digital transformation or create obstacles. This can be, for example, knowing certain technicalities (i.e., know-how) that are necessary for undertaking specific jobs or processes and understanding an organization’s hidden rules. This knowledge makes these actors very powerful and ensures that they play a key role in successful digital transformation”.

Organizational routines can influence power relations, particularly because of fears arising from the need for employees to increase their skills as a result of digital implementation. The respondents felt that some university managers tend to fear a possible loss of authority with employees because of the loss of power as a consequence of digital implementation. A systems developer (D3) noted:

“While implementing IS in a public organization once, I remember that a manager said that employees now do not need to receive instructions… as all work processes were automated, which meant that his authority and guidance and the need to order employees to carry out work had decreased, because the new systems took care of all processes and the manager only had to approve them”.

Organizational routines tend to influence user participation, which can increase their power in the course of digital transformation. This aspect has not been directly discussed in the literature, but it can be concluded that this can take place in response to the participants’ reflections on and reactions to several consequences of the preceding repetitions of the routine ^[26]. Systems developer (D2) stated:

“Organizational routines can influence and increase participants’ power in the course of digital transformation. It is obvious that when users agree that digital transformation can improve their work processes and make their work easier and more productive, they tend to participate more in digital transformation initiatives, which, in turn, can increase their power”.

The interview data showed that digital transformation and solutions within organizations tend to encourage participation because those that are promoted to senior positions will, in the future, comprise employees who will support digital transformation and implement appropriate processes. This is because such initiatives attract support from both the government and private organizations. A systems analyst (A4) supported this finding and said:

“In the course of digital transformation, we tend to notice that employees normally support our efforts and make sure that they are successful. In a country that has an e-government policy, the employees know that we are the future and so ensuring the current and future success in an organization means supporting us in our efforts”.

7. The Development of the Theoretical Framework

The main conclusions that informed the development of the theoretical framework are as follows:

Organizational routines can inhibit performance during digital transformation because they can influence users’ capacity to complete tasks which are integral to the process of change.
Organizational routines have an impact on organizational processes in times of digital transition.
Organizational routines tend to be flexible throughout a digital transformation.
Organizational routines can be impacted by managerial actions during a period of digital transformation and transition.
This found that organizational routines are typically influenced by new technologies in the course of a digital transformation.
During a transition to digital transformation, the performance of employees and actors enables an analysis of the influence of organizational routines. The adaptation of new approaches can serve as the principal reason for the acceptance of subsequent change.
The engagement of key players in organizations, in conjunction with their power over the course of a digital transformation, can effect change as they exert their control over beneficial information and incorporate their knowledge concerning routines to determine how work should be completed.

This framework was developed to highlight the main issues and themes regarding the means of theoretically understanding how organizational routines impact the digital transformation transition according to the relevant theories cited in the extant literature. For example, the evolutionary theory of economic change assigns greater emphasis and importance to the idea of practice inheritance, which can be related to routines in changing environments. This concept was further investigated in order to consider the impact of organizational routines on the digital transformation transition in interviews with the university staff. The analysis of the results identified the fact that inherited infrastructure practices as routines played a role in the transition, demonstrating a strong impact of organizational routines on digital transformation transition. This was supported by a number of the interviewees, who explained that the routines concerned moved from a previous situation to a new situation, and that a certain amount of effort was required to understand how to develop them and improve them using digital technologies. The existing organizational change literature and theory highlighted how routines impact performance, and how performance is developed or changed. This can be very important for understanding how organizational routines impact digital transformation transitions, and this was evident in the university, since it sought to improve the performance of its managerial functions and its services to its stakeholders by understanding how organizational routines can change while comprehending how performance is developed. This is because digital transformation transition is influenced by the effect of its performance. Additionally, digital transformation engenders general improvements in performance. In addition, organizational change theory highlights how performance changes. This informed the current study’s focus and the analysis of the interviews which was conducted through the lens of organizational change theory. The lens of organizational adaptation and flexibility also assisted in interpreting the findings regarding how routines are adapted and how flexible they are. Understanding the role of power in the impact of organizational routines on digital transformation aided the interpretation of how the decisions which are taken can play a role in the success of a digital transformation transition.

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Ibrahim Almatrodi

Dimitra Skoumpopoulou

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