A short exposé of the thoughts of Professor John Dearden in the context of enterprise systems.

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Johan Magnusson
Centre for Business Solutions
School of Business, Economics and Law
University of Gothenburg
Reading John Dearden:
Fundamental Issues of Enterprise Systems
2013-08-29Centrum för Affärssystem

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Outline
• Automation of Decisions
• Real Time Information
• Total Systems
• Limitations of Technology
• Shortcomings in Software development

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Historical back-drop
• Automation of administrative data
processing during the 1950-60s
• International Business Machines
• Systems Theory
• Total Systems and Administrative control

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John Dearden (1919-2004)
• Prof Harvard Business School
• Management accounting
• Management information systems
• Harvard Business Review(1964-1972)
– 1964: Can management information be
automated?
– 1965: How to organize information systems
– 1966: Myth of real-time management information
– 1967: Computers – no impact on divisional
control
– 1972: MIS is a mirage

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Why Dearden?
”…the more information available, the better the decision. This
end is to be accomplished by having vast amounts of data
stored in a computer memory, by having this information
constantly updated by point-of-action recorders, by having
direct interrogation of the data stored in the computers
memory available to the executive, and by having immediate
visual display of the answer.”
Dearden, J. 1964. Can management information be automated? HBR.

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Decision making
• Rationality?
• Automation?
• Need to differentiate based on functional
demands
• Are we building systems and our perception
of business on faulty models?

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Short Recap Management Information Systems
• Received acceptance as a concept during the
late 1950s
• Predecessor for todays Enterprise Systems, for
instance ERP, APS, MRP et cetera
• Two primary purposes
– Enhance the quality of decisions
– Enhance the efficiency of processes
• Fundamental design
– Central database
– Support for reporting
– Formalized business logic/rule base
– Single-entry

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Automation of decisions
• Strategic planning, managerial and
operational control
• Information needs depending on
configuration of processes and type of
decision

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Icaru´s flight
• Failure, failure, failure
• Hubris and faulty assumptions
• Technological over-belief and mystification
• Numbers as fetisches and black boxes
• Fog of war: the shortcomings of rationality
”During the past year or two, systems specialists have been developing an approach to management information systems which, if
left unchecked, could cause serious problems to the companies that adopt it.” 1964:128

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The riddle of Business logic
• What can really be automated?
• Where does our faith come from?
• We are quick to generalize
– The need to differentiate IT
– The (In)Competent Buyer
”I believe that management control systems are so different from operational control systems that the techniques which have proved
successful in automating inventory and production control systems are not at all applicable to the typical management control system
and, if used, will result in weakening the entire structure of the management information system.” 1964:131

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Information needs
• Information controls the control
• Information is spread throughout the
enterprise along with decision making
• Control models are dilapidated
”Would management want hourly or daily profit information? Ridiculous! Even if it were available, it would be meaningless. In fact,
none of the information used in either strategic planning or management control can be practically provided on an instantaneous
basis. This information requires periodic accumulation and analysis. In fact, the shorter the period covered, the less reliable it is.”
1964:133

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Slowly but surely
• ”All the good reasons for why it will work
once it is finished do not help the engineers
while they are making it. ” Bruno Latour.
1987:11
”Many companies have installed the most advanced data-processing equipment and yet employ accounting and budgeting
techniques that were out of date 20 years ago. At some future time it may be possible to automate effectively the higher level
management functions. This, however, will require considerable improvements in both equipment and techniques.” 1964:135

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The myth of real time

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The Wet dream of the Controller
• Total information
• Dashboards, speed-o-meters…
• Once again, the need for information
”The latest vogue in computer information systems is the so-called real-time management information system. The general idea is to
have in each executive’s office a remote computer terminal which is connected to a large scale computer with a data bank containing
all of the relevant information in the company.” 1966:123

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Control as an illusion
• Accounting as Archeology
• The tenets of administrative evil
”My conclusion on management control is that real-time information cannot be made meaningful – even at an extremely high cost –
and that any attempt to do so cannot help but result in a waste of money and management time. Improvements in most management
control systems must come from sources other than real-time information systems.” 1966:127

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Dearden’s foresight
• Multi channel strategies
• De-humanization
• The Rationalization Project
”A manager in the year 1985 or so will sit in his paperless, peopleless office with his computer terminal and make decisions based on
information and analyses displayed on a screen in his office…After all, 15 or 20 years is a long time away, and the concept of a
manager using a computer to replace his staff is not beyond the realm of theoretical possibility. On the other hand, this concept could
be a complete pipedream.” 1966:131

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Total Systems
• Total integration
• The entire value chain
• VMI, autobilling et cetera
• Pandoras box…

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Bloating
”Can a single, integrated system be devised to fill all of managements information needs? Only if Superman lends a helping hand.”
1972:90

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Development
• Systems development presupposes
business knowledge
• Standardization
• The renessaince man…
”But the notion that a company can and ought to have an expert (or group of experts) create for it a single, completely integrated
supersystem – an ’MIS’ – to help it govern every aspect of its activity is absurd.” 1972:90

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Organization of IT
• IT departments
• Sourcing
• Right back to the role of IT
• Professionalization
”But to organize this group properly, the company should appoint an executive vice president for information to supervise the work in
the group – that is to say, the systems of the staff vice president, the controller, the logistics information group, the marketing
information group, and so fort.” 1972:95

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Take-aways
• Automation comes with several limitations
• The relation between business, process and
IT is based on formalized business logic
• Infrastructure governs practice
• Decision making is not always rational
• The principle of ”Good enough”