AN ASSESSMENT OF IT MATURITY OF BH COMPANIES

M.Sc. Tarik Zaimović Faculty of Economics, University of Sarajevo Trg oslobo enja Alija Izetbegović 1, 71000 Sarajevo, Bosnia and Herzegovina Tel: 033 447 559 Fax: 033 447 560 E-mail address: tarik.zaimovic@efsa.unsa.ba Lejla Turulja Faculty of Economics, University of Sarajevo Trg oslobo enja Alija Izetbegović 1, 71000 Sarajevo, Bosnia and Herzegovina Tel: 033 447 559 Fax: 033 447 560 E-mail address: lejla.turulja@efsa.unsa.ba M.Sc. Zlatan Šabić Faculty of Economics, University of Sarajevo Trg oslobo enja Alija Izetbegović 1, 71000 Sarajevo, Bosnia and Herzegovina Tel: 033 447 559 Fax: 033 447 560 E-mail address: zlatan.sabic@efsa.unsa.ba Key words: information technology, stages of growth model, technology lifecycle, IT maturity, IT evolution.

Introduction
The IT maturity can be seen as an issue of matching services offered by IT with the requirements of the business. In businesses of any significant size, IT maturity and alignment of IT with business is a hard problem that currently is not completely solved. With the advent of cross-organizational collaborations, the problem gets a new dimension because in crossorganizational settings there is usually no single decision point. Various maturity levels can be identified for the alignment between business and IT. Therefore, maturity models seem to be a suitable vehicle for deeper understanding and assessment of IT maturity within companies. In order to assess current status of IT maturity in BIH companies a crosscutting overview of two commonly used IT/IS models has been used in our research – Nolan's stage model and IT value-perception model.
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1. Models used
The IT and information systems have a significant impact to the overall operations of a company and therefore to development and sustainability of its competitive advantage. The information and communication technologies in general are becoming essentials of the companies' new competitive powers, as well as the source of the new, 21 century business paradigm. The eBusiness systems are changing, from the very bottom, the business paradigm of the framework within which the companies were conducting their businesses so far. As we have seen, the ERP systems are changing companies’ internal business procedures while the SCM systems are changing the perspective in regard to the value chain, simultaneously compressing it and changing its structure. The virtual value chains represent a complementary part of the traditional value chain and are fully changing the access to information of a company directing it more and more towards the ‘information economy’ (Colin Turner, 2002). On the other hand, the CRM systems are changing the attitude of a company towards its buyers/clients from the very bottom, and, for what is even more important, are boosting client’s expectations considerably, and therefore permanently changing the barriers in regard to penetration into a certain industry. The CRM systems are simply forcing companies to compete for their clients’ satisfaction and loyalty and that, in the end, results in a better, and more efficient and effective service/product the buyers are getting. And finally, the PLM and SRM systems are directly altering company’s interaction with its partners whether these are the strategic partners within the production process or strictly suppliers. Product’s life cycle, starting with the design, planning, all the way to the production process is becoming shorter and shorter. Suppliers are becoming a part of the “expanded company”, while the application of the PLM systems adds to the final product’s quality and functionality and therefore the final product completely matches specific user requirements within the deadline that was, not so long ago, considered impossible. However, in order for a company to keep its competitive position in a long run, it has to either implement certain (or all, depending of the software manufacturer) of the systems mentioned or to constantly innovate existing software solutions in order to keep a certain production/service cycle’s efficiency level and the level of effectiveness of its overall relationship with its buyers. Users, in the end, have no interest of knowing what system the company is using. If they can get a better and a cheaper product from the competition and the better pre and post purchase service they will change their “supplier” and buy the product from the rivaling company. 1.1. Nolan’s stage model of the “information systems maturing” In 1979, Richard L. Nolan developed, and in 1995, he updated his six stages IT Evolution/Maturing Model (Nolan and Croson, 1995) as one of the earliest models/frameworks of the information system stage development, meaning the evolution of information technologies within companies. Nolan is of an opinion that the companies, instead of trying to make a single large stride forward when it comes to the implementation of IT within their operations, should think of IT evolution as a sequential process. He proposes six stages that this evolution should be taking place through. According to Nolan, the information technologies are developing fast due to two reasons: (i) new technologies are fast developing because the life cycle of a technology – from the idea to the product becomes shorter and shorter, and (ii) because the business environment is increasingly demanding of the IT to act as a central pillar of business support and often as a source of their competitive advantage. Good example of this was given by Lou Gerstner, the

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former IBM CEO. When he presented "e-business on demand" – the concept today presenting the essential of IBM’s business strategy, he was told that this can’t be done since in order to do it, 5 new IT technologies/products need to be invented. He replied that he does not understand what seems to be the problem. It was Nolan who was, in 1979, the first to introduce the basic S-curve model (the S-curve model will be described in more details in the following chapter) as a concept describing information technologies, and to define that the IT and information systems within the company have to evolve through six stages (Turban, McLean and Wetherbe, 2002). These six stages are, according to Nolan, divided in two eras (the Data Processing and the IT Era) separated by the technology transformation gap/discontinuity.

Graph 1: Nolan’s Model Stages

According to Nolan, the initial or the Data Processing Era is characterized by clear boundaries between the information system types and levels (transaction, management and DSS systems in particular, but also between the accounting, HR and production systems) and the fact that the information systems within the individual organizational units are often fragmented and not interrelated. Very often, the main tool used for organizational restructuring is TQM (and the introduction of TQM systems), while the business logics are based on the reduction of costs and efficiency. The result of this era is the increase of the work and the information processing speed within the organization as well as the elimination of all of the organizational barriers and the activities not bringing profit (Mutsaers, Zee and Giertz, 1998). The second era, or, according to Nolan, the Information Technologies Era is characterized by establishment of flexible boundaries between various systems with a greater focus to interconnecting of various information systems within the organization into a whole, and the effectuating of all of the IT and systems advantages in regard to the company’s value chain. When defining this, phase, Nolan is saying that it is characterized more by a reengineering of the business process and the reorganization of functions and therefore the business logics are aiming to improve the effectiveness and the improvements are oriented towards the client’s requests. Finally, Nolan is stating that the result of the IT Era is ‘the time dedicated to market, meaning the outer feeling” – the company is putting client’s requests up front and sets the market demands at the center of its business strategy (Mutsaers, Zee and Giertz, 1998).

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As noted earlier, Nolan’s model consist of six separate stages divided into two eras. The model itself is not strictly descriptive – it is based on a dynamic model anticipating a sequential setting up of each of the stages (Andrew Friedman, 1994). In the next paragraph we are presenting the structure of eras and stages: • Data Processing Era o Initiation o Expansion o Control 1.1.1. Initiation Undoubtedly, as in majority of IT models, the first stage consists of the setting up of a system that usually starts by purchasing of hardware and software and the basic implementation of the IT system central components. This stage is usually focusing on automation of administrative tasks, finances and accounting. The technology itself does not provide significant results yet within the company’s overall operations and the curve line is still slightly ascending. 1.1.2. Expansion The second stage consists of a process within which the expanding of the information technologies use becomes a new “mantra” of the company’s business operations (Chaffey and Wood , 2005). Hardware and software are being purchased quickly while each of the company’s organizational parts wishes to have its own, tailored, information system. Companies in this stage are, as a rule, hiring considerable number of IT staff while the management is usually not asking for any significant economic justification for the investments made for the company’s IT and information systems. Information systems designing is focusing on satisfying the requests of users within the company and only marginal connections are being established between various information systems within the company. Technology curve is going up fast meaning that the technology is starting to provide significant results within the company’s overall business operations. 1.1.3. Control The period of rapid development ends up by stagnation and a slowed growth since the management becomes worried because of the scope of changes that the technology introduced in a previous stage brought in. At this stage, the management becomes aware of the height of the automation costs and therefore introduces strict control of the overall “company informatization”. In addition, it becomes clear that the IT and information systems are not a “magic wand” resolving all of the company’s problems nor can act as the sole source of the company’s competitive advantage (Mutsaers, Zee and Giertz, 1998). This stage usually results in a whole line of rules and procedures referring to IT and information systems as well as the increased participation of users (particularly at the middle management level) in the designing and implementation of company’s information systems. The curve is stepping into a stagnation stage; however, it can still possibly grow a bit. • IT Era o Integration o Data administration o Maturity

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1.1.4. Integration Integration represents a first phase within the IT era and the technology is now being integrated, in technological terms – with other systems, but in the organizational terms as well – it becomes company’s way of life. This is the stage where the technological discontinuity appears as well as the slight saturation of the overall technology curve ahead of another curve growth. Companies at this stage, before they can develop their IT systems further have to replace the old, disjointed systems, while the new, integrated systems have to become the essentials of the company’s IT business operations. Users are already taking full control over the information system and the ways the IT “should” influence company’s operations (Bocij, Chaffey, Greasley and Hicke, 2003). Technology curve is slightly growing. 1.1.5. Data Administration The stage called Data Administration or Architecture is a sort of a preface to a technological maximum. This stage is a stage of integration and sorting out of the “organizational knowledge” as ell as the beginning of the full organizational understanding of “all” of the employees of advantages that the technology exploitation is bringing (Khandelwal and Ferguson, 1999). The company is increasingly relying on IT and various information systems as the permanent essentials of its competitive advantage. For instance, the company is intensively developing CRM and SCM systems, while the top management’s role becomes progressively more significant. The technology curve is growing fast and approaching the point of its technological maximum. 1.1.6. Maturity In the last phase of the IT era, technology is stepping into a maturity phase when the information systems and technology become a part of business strategy and planning, and permanent source of competitive advantage of an organization/company. At this stage, the company’s information systems become part of each organizational unit, thus becoming the irreplaceable part of business operations. Return to the old working methods is no longer possible, so the company has to accept that the IT and information system are becoming a part of its regular strategic planning. This stage introduces another change – the ITs are not technologic phenomenon led by experts any more, but the strategic process based on management resources with a clear strategic result (Mutsaers, Zee and Giertz, 1998). Richard Nolan revised, or rather extended, his model in 1992 by introducing three more stages that were also given by the third S-curve in the so called “Network Era”. Nolan accentuates that the company is, again, experiencing the discontinuity of evolution by entering this third era, discontinuity that is more of organizational/business nature this time, and brings the re-engineering of business process with it, in the course of creation of network/dynamic organizational structure that is fully oriented towards customers, and aiming to satisfy all of the specific needs and requests of customers/users. These three new phases are: the Functional Infrastructure, Tailored Growth and Rapid Reaction stages. Analyzing the third era stages, Nolan and Gibson emphasize that: “… the history of IT development is not over yet and the third S-curve is just an interim state, and as new EDP1 technologies develop and companies become more ambitious when it comes to the role of the EDP in business, there will be more S-curves”, again confirming that the IT evolution

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represents continuous process that would upraise the overall positive results accomplished by the company in each new iteration (Khandelwal and Ferguson , 1999). Finally, in criticizing Nolan’s model, Andrew Friedman underlines that during the time the model itself was not empirically proven, and that the series of texts have harshly criticized the definitions of different stages and eras, but he concludes that Nolan’s model (the first one drafted 1972 and additionally updated in 1979 and 1992) is still one of the most powerful models of IT/IS maturation/development within the company. Friedman specifies four reasons why (Andrew Friedman, 1994): - Nolan’s model is the only explicit model that shows the transformation of IT/IS within the company in relation to the business output provided by the introduction of the IT itself, thesis, stages and eras themselves are clear, easily visible and simple for testing, the model includes simple “instructions for use”, and it is easily applicable to majority of companies, in spite of all the critique, the model contains a certain dose of empirics and concrete evidence of its applicability. On the other hand, Somers and Nelson emphasized that Nolan’s stages definitely have practical application, and by providing the analysis of the life-cycle of the implementation of ERP systems they show that the taxonomy of different factors upon the implementations is completely aligned with all of the six stages within the Nolan’s model (Somers and Nelson, 2004). 1.2. "IT value perception" model It was due to the shortcomings of Nolan’s model, especially the lack of an empirical proof of the model itself, that Winggers, Kok and De Boor – de Wit (2004) defined the new model of the IT evolution within the company named the “IT value perception" model. The authors of this model pointed out that the information technologies are now becoming “business within the business”, and not only that they have their place in the company’s value chain but they also have their own value chain that becomes an important complement to the overall company’s value chain. Earlier on we mentioned that ebusiness systems and ITs are creating “virtual chains of value” in business, changing the concurrent value frame in which the companies are operating, as a complement to the traditional value chain, thus significantly changing the structure and eliminating barriers for entering into the
Graph 2: "IT value perception" model 6

certain industry. Relying on this transformation of business operations in the 21st century, the authors of this model defined the correlation between the maturity of demands on the X-axis and the maturity of supply on the Y-axis, and presented the IT transformation in the company within four stages: (i) IT as facilitator, (ii) IT as service, (iii) IT as partner, and (iv) IT as enabler. Maturity of supply deals with the IT function professionalism and quality within the company/organization while the maturity of demand stands for an expression of company’s awareness in regard to use and demand for the appropriate level of quality of IT systems within that company. The model itself, within this context, presents the perception and resoluteness of management in regard to the added value provided by IT as well as the role of the IT in company’s business strategy. In order to properly present the different stages of the “IT value perception” model as well as the relations of different stages to business strategy, the authors of this model used the Henderson–Venkatraman’s IT Strategic Alignment model used to transform organizations/companies (Henderson and Venkatraman, 1999). Henderson – Venkatraman’s model underlines the connection between the functional integration between the company/business and information technologies clearly pointing out that the business strategy has to have a clear connection with the infrastructure and processes needed for its implementation. Henderson and Venkatraman are emphasizing that the competitive advantage is never based on a single, specific IT platform or application, no matter how specific and complex it might be, but on the ability of an organization/company to use the functions/possibilities of that IT platform in the long run. Therefore, in their model, they are presenting mutual interactions of the following four company segments: - business strategy, business infrastructure and processes, IT strategy, IT infrastructure and processes.
Graph 3: Alignment of business and information technologies: Henderson –Venkatraman model

1.2.1. IT as facilitator During the first stage of the “IT value perception” model, company management usually does not give much attention to its information technologies. IT Manager reports directly to the Chief Financial Officer while the ITs are not considered important for the company’s success. Usually, more attention is paid to the IT related costs than the added values that the information technologies have in company’s business (Winggers, Kok and De Boor-De Wit, 2004). This “IT Value Perception” model stage is characterized by:

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-

Focusing on reduction of total company’s operations costs, Information technology approach is based on automation of standard/existing functions,

-

Business logic is focused on cost control instead of the added value.

Henderson – Venkatraman model defines the following – business strategy shall provide a framework for an organizational structure and related processes. Respectively, the IT represents administrative support functions, and therefore no specific attention is given to the strategic positioning of IT within the company. 1.2.2. IT as service The next stage of this "IT value perception" model is the stage in which the information technologies are becoming part of company’s everyday operations, while the IT processes and services are becoming parts of the overall business process. In this stage, the IT infrastructure usually gets optimized, leading to IT-related cost reduction. When a company steps into this stage of the "IT value perception" model, it usually gains additional value in terms of economy of scope and broadness, as it was earlier described. This “IT Value Perception” model stage is characterized by: - Automation is lifted up from administrative to management level, Approach to information technologies in now more based on quality, Business logic is focused on cost optimization.

Henderson – Venkatraman model defines following – IT strategy shall provide framework for IT infrastructure and related processes. Respectively, the IT standardization and organizational strengthening is dictating the way the final users within the company are using IT, while an overall segment of IT services is adjusted in order to increase the business efficiency (Henderson and Venkatraman, 1999). 1.2.3. IT as partner The third stage of the "IT value perception" model is specific since the information technologies are finally recognized as a key business success factor and factor of achieving company’s business goals. The IT strategy becomes the integral part of entire company’s business strategy, while the impact analysis of investments in IT have on business efficiency and effectiveness, becomes a part of common company’s business cycle. IT is finally becoming a business partner at this stage. This “IT Value Perception” model stage has following features: - Information technologies/systems become part of company’s strategic advantage, Approach to information technologies is now based on expanding the IT outside the company (inter-organizational systems), Goal is to increase the market share,

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-

Business logics are focused on shifting the perspective of the ITs' role.

Henderson – Venkatraman model defines following – business strategy is determines the IT strategy that will provide a framework for IT infrastructure and the processes related. Respectively, the information technologies are becoming key factor within the company’s operations, while the adoption of new technologies becomes a survival issue. The entire IT services segment is adjusted to business strategy of achieving higher efficiency. 1.2.4. IT as enabler In the last stage of "IT value perception" model, IT is representing a decisive factor of the company’s overall business strategy. Company has no separate IT strategy, and the entire operation would not be possible without the information technologies/systems present. This, final “IT Value Perception” model stage has following features: - IT now becomes the basis of competitive advantage and dominant market position, Approach to information technologies is now more based on creating sustainable income, Business logic is focused on creation/lifting the business/competition barriers.

Henderson - Venkatraman model defines the following – there is no clear differentiation between a business strategy and an IT strategy. Respectively, IT becomes a basic source of company’s competitive ability, and separating IT strategy from overall business strategy is simply impossible. At this stage, the entire company is adjusting to advantages brought by information technologies, and the technological changes are becoming the integral part of company’s competitive dynamics. Finally, the "IT value perception" model itself defines the IT evolution within company and the way the IT is increasingly becoming part of management goals, as the company goes up the stages mentioned, focused on creating and maintaining company’s competitive advantage. The "IT value perception" model itself is a continuation of strives to present the evolutional role of that the IT is playing in company’s transformation within a clear stage model and its empirical base. This model represents one of the latest of this kind to appear within the scientific debate on eguided company evolution, and provides in the best possible way, an understandable overview of all the stages company has to follow within its evolution into a true e-business company. In a very clear way, it emphasizes the role of IT as a generic term, and only by clearly referring to specific functions and goals company is striving to accomplish; it emphasizes specific/reference types of e-business systems. By setting a mutual relation between demand and supply maturity, for the first time the model underlines, in a very clear way that it refers to the strengthening of the overall business system, i.e. it underlines the relation between the IT and company’s specifics in terms of its competitive ability. 1.3. Comparative overview of features of the two models Even though two models are not directly comparable, it can be useful to summarize their features into one comparative overview, as provided in the following table.

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Nolan model Data Processing Era Initiation − − − Purchase of hardware and software begins Basic implementation of the central components of the IS The technology itself still does not have a significant impact on company’s operations Developing of the information systems within companies becomes a new "mantra" in company’s operations Each of the company’s organizational units wishes to have its own, tailored information system Hardware and software are purchased rapidly Large number of IT staff is being hired No significant economic justification for investing into IT and information system is required Management is aware of the costs brought by automation/informatization process A serious control over the process of "company informatization” begins. Company management becomes aware that the IT and information systems are not the "magic wand" that can resolve all of the problems that may occur nor they can be used as a "sole" source of company’s competitive advantage The whole set of rules and procedures referring to IT and information systems are being introduced Users involvement (especially at the middle management level) in designing and implementing company’s Information System constantly increases IT as facilitator

“IT value perception” model − − − IT is not considered important for company’s success Focusing on the reduction of the overall company operations costs Access to information technologies is based on the automation of the existing /standard business functions Business logics is focused on cost control, instead of the added value ITs are seen as administrative support functions, while no special attention is being given to their strategic positioning IT Manager usually reports directly to a Chief Financial Officer

Expansion

− −

− − −

Control

IT as service

− −

− −

− −

− − −

− Integration − IS are now being integrated with other systems, both in technological and organizational terms, thus becoming company’s ‘way of life’ First signs of technological discontinuity and a slight saturation of a technology curve appear First signs of need to replace the old and dispersed systems appear Users are starting to take control over the information system and the way that IT "should" influence company’s operations IT as partner −

− −

IT is becoming a part of company’s everyday operations IT processes and services are becoming an integral part of the overall business process IT infrastructure is being optimized which leads to reduction of IT related costs IT and IS bring added value in terms of economy of scope and broadness Automation of operations is raised from administrative to management level Approach to information technologies is now more based on quality Business logics is still focusing on the optimization of costs IT standardization and organizational strengthening are dictating the ways in which the final users within the company are using IT Entire company’s IT/IS segment is adjusted to increase the efficiency IT/IS are finally recognized as the key factor for successful operations and accomplishing of business goals Information technologies/systems are becoming a part of company’s strategic advantages Approach to information technologies is now based on expanding IT/IS outside the company (interorganizational systems) The goal is to use IT/IS for increasing company’s market share

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Data administration

Maturity

process of integration and setting "organizational knowledge" starts, as well as the development of a full organizational awareness of "all" company employees of advantages that the exploitation of technology is bringing new systems that the company is developing are increasingly focusing on strategic business goals company is intensively developing CRM and SCM systems as the integrators of its operations in general Information systems and technology are becoming part of the business strategy and planning, as well as permanent source of organization/company’s competitive advantage Return to the old way of operation is not possible any longer and the company has accept the fact that the IT and information systems are becoming part of its regular strategic planning

Business logics is focused on altering the perspective of the role of IT in company’s overall operations IT is becoming a key factor for company’s operations, while the adoption of new technologies becomes a matter of survival The entire IT services segment is adjusted to business strategy of increasing the effectiveness

IT as enabler

− −

Information technologies (IT) represent a determining factor of the overall company’s business strategy IT are becoming the foundation of the company’s competitive ability and its dominant market positioning, i.e. the entire business would not be possible without the information technologies/systems Approach to information technologies is now more based on creating sustainable revenues. Business logics is focused on creating/lifting of business/competition barriers IT are becoming foundation for company’s competitive ability Separating IT strategy from overall business strategy at this stage is simply impossible

As we can see, models are using different terminology, and separate stages differently, but both models clearly recognize the evolution of IT in an organization from purely technical tool for efficiency improvement to mature status of strategic factor that is determining the overall company’s business position in terms of its competitive advantages. Also, it is quite clear that both models recognize the change of organizational treatment of IT from rather “naive” (making the investments into technology without clear cost/benefit rationale and treating the IT as something that can be managed in the “afternoon hours” of managers that are responsible for some other functions) to clear perception of IT as one of the strategic organization’s functions.

2. Research methodology
In order to better understand and analyze the IT maturity in BiH companies, a research was conducted on basic characteristics and current state of IT and information systems. Subject of a research was the evaluation of IT maturity in BH companies and defining of the BH companies’ IT function maturity level in regard to the two models observed. Methodology-vise, this research presents a quantitative research of the IT maturity of the companies themselves and the method used is an opinion poll conducted on a target group of professionals. A questionnaire was sent to 120 BH companies, while 40 of them participated in a very research, which represents 30% response rate. Within these companies, we were asking for answers from respondents directly in charge of the IT function within the
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companies participating observed. Quantitative research wad done using the data entering program (LimeSurvey). A web form in accordance with the previously developed questionnaire was made and put at the following web site: http://www.efsa.unsa.ba/nir. Respondents were contacted in advance and asked to participate in this research. Respondents did the survey (answering the survey questions) on-line, and after that, the data was exported from the Web Survey System into the SPSS (Statistical Package for Social Sciences1) program. Statistical data processing was conducted using the SPSS and the analysis using SPSS was done based on a sample consisting of the 40 companies which participated. All of these companies are from Bosnia and Herzegovina, and all of them were making profit in the previous 6 months. Table on the right presents a structure of permanent employees within the researched sample. In addition, it is important to note that 65,7% of researched companies are privately owned and 27,7 % are state owned (5,7 mixed and 2,9 cooperative). Also, 22,9% are in financial services, 20% are in production and 20% in trade, followed by 17% in services and 11% in civil-works (3,6% provided no answer to this question). less than 10 11,4 % 10 – 50 20 % 50 – 100 8,6 % 100 – 500 40 % 500 – 1000 11,4 %

Before the analysis was conducted, the database was more then 1000 8,6 % cleared and adjusted for the statistical analysis. Open end answers were coded, while the multiple choice questions were transformed into multiply datasets. Statistical analysis consisted of cross-tabular presentation for all the questions within the questionnaire according to the basic demographic variables: (i) number of permanent employees, (ii) type of ownership, (iii) basic industry (iv) entity, and (v) municipality. Research data were processed by PRISM Research2 Ltd. – a local research company.

3. Research results
Within the research conducted and in line with the questionnaire we have asked the BH companies’ managers on the maturity of the IT function within their companies.
Intensive - all of the functions/services/departments are using IT Moderate - part of the key functions informatized Low - only few of the functions informatized

It is obvious that the IT became a business necessity and that it is far from the Data Processing stage. Research has shown that the majority of companies use the information technologies intensively, meaning that at least some of its sectors/departments are using IT. Total of 68,6% of them are intensively using IT, while 25,7% of

5,7 25,7

68,6
1

More on http://www.spss.com Graph 4: To what degree, in your opinion your 2 More on http://www.prismresearch.ba company uses the information technologies? 12

companies have part of their key functions informatized. The research also shows that, when it comes to the further informatization of companies, in 65,7% of the sample majority of expenditures within the IT sector is used for purchasing of hardware while 34,3% of companies are investing more into software. When it comes to the equipment companies are using, 94,3% companies have answered that they have no need to change the equipment they have, while only 5,7% of companies feel that they urgently need to replace their equipment.

11,4

over 20

17,1

up to 20

17,1

up to 10

54,3

less than 5

0,0

10,0

20,0

30,0

40,0

50,0

60,0

Graph 5: How many employees are working in your IT sector/department?

On the other hand, relatively surprising information refers to the number of staff within the IT/IS departments within the companies. The research shows that somewhat less than a half of the companies analyzed have more than 5 employees working in their IT departments. The results is especially interesting since it obviously indicates that the IT function is considered by companies as a matter of importance and that they are taking care to employ professional and competent staff. What is very interesting is that 20% of the companies within the sample have more than 500 employees, and that 28,5% of companies have more than 10 employees working in their IT departments. The results of this research referring to division of the IS research and development functions are showing that it does exist since 37,1% of the companies have these two functions separated. If we have in mind that only 20% of the companies have more than 500 employees, it is clear that many of the companies with less than 100 employees still have R&D as separate functions. Yet, one may conclude that when it comes to the companies mentioned, they are mainly outsourcing IS development, meaning that they are buying ‘ready made’ solutions and that their IT department is only performing its maintenance – this is probably the case since 54.3% of companies have less than 5 employees working in their IT department. What also comes as a surprise is an indicator related to the IT use regulation in the companies. The results achieved - 57,1% of companies that have certain regulations referring to this matter is a surprise having in mind the overall lack of order in regard to the BH market and business in general. This is especially obvious when we look into the structure of these companies – the number of their employees, since 60% of the sample consists of companies with more than 100 employees. We can, in fact, conclude that almost all of the medium and

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large companies within the sample have the IT procurement, use, coordination and compatibility within their company regulated.

Majority of departments within my company don't have their information systems

2,9 28,6 68,6 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0

Majority of departments within my company have their own information systems

My company has an integrated IS

Graph 6: Which of the statement would best describe your company’s IS?

In these two questions, Yes respondents were asked No to analyze their No answer company’s IS. The result comes as a 28,6 surprise within the 45,7 research since 68,6% of companies have integrated IT systems. On the other hand 28,6% of companies 25,7 have several information systems split across company’s departments. In 45,7% of companies the Graph 7: If each of departments have their own IS, was anything, system was during their purchase or latter, being done in terms of their linking amalgamated later on, into a whole? while 25,7% of companies purchased or developed there is system at the level of an entire company or purchased/developed several information systems for their departments and are still remaining at that stage. This research has shown that there is a clear understanding of the importance of the information technologies in everyday business and their impact to company’s operations, hence the result of 88,5% which cannot function without IT or consider them to be the foundations of quality of their business operations, while 97,1 companies consider thanks their increased efficiency to information technologies or considers them to be their competitive advantage. The result at this question is almost identical to one we from the previous question – 94,3% of companies are satisfied with the information technologies they own. The same number of companies is satisfied with the very information system and

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considers it satisfactory in regard to their everyday business. The same number of companies have answered that their IS is managing procurement, controlling distribution and is used for contacts and relations with their suppliers/partners.
yes No No answer 5,7 11,4

82,9

Graph 8: Does your company has a customer relations system and do you have records on your customers at all?

2,9 54,3 28,6 14,3 0,0 10,0 20,0 30,0 40,0 50,0 60,0

No answer

Not at all - our IS is not connected with our partners/suppliers/etc.

In a moderate degree - only some parts of our IS are connected to our partners/suppliers/etc.

Intensively - our IS is fully connected with our partners/suppliers/etc.

Graph 9: To which degree is your company linking its IS system to the information systems of your partners, suppliers, etc?

The three previous questions referred to the functioning of the information systems of companies in regard to customer relations and connections of these systems to their partners. There are rather high results we got in all of these three questions in regard to good records on business partners, thus 94,3% companies have, within there is, part of the system referring to

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customers/suppliers. However, only a small number of companies - 14,3% of them have their information systems connected to those of their partners. Furthermore, the research shows that 74,3% of companies plans are taking the information technologies into account within their strategic planning. Out of these, in 51,4% of companies, the CIO is at the same time part of the companies’ top management.

4. Conclusions
To summarize previously commented research results, we can say that they are fairly surprising to authors. The usual perception of BH businesses as being quite traditionally organized and without usage of modern information technologies simply does not fit into factual data received through research. Of course, one must be skeptical regarding some of the answers and statistics related to that. For example, 68,6% of companies claimed to have integrated IT systems. It is quite questionable does the term “integrated IT system” has the same meaning for all respondents. Truly integrated IT systems are generally not so easy to find and it is hard to believe that two thirds of BH companies are having such situation. On the other hand some of the answers clearly position most of the companies into more mature stages of both models used. The fact that 88,5% companies responded that they cannot function without IT, that 97,1% companies consider IT responsible for their increased efficiency and considers IT to be their competitive advantage, the fact that 74,3% of companies are taking the information technologies into account within their strategic planning and that 51,4% of companies are having their CIO positioned to companies’ top management has shown that there is a clear understanding of the strategic importance of the information technologies and its enabling role for their businesses. It means that majority of companies that responded to research are in IT era in Nolan model’s sense, and are perceiving the IT as partner and enabler for their core businesses, in “IT value perception” model’s sense.

References
Friedman A. (1994), "The stages model and the phases of the IS field", Journal of Information Technologies 9, 1994, pp. 137-148 P. Bocij, D. Chaffey, A. Greasley and S. Hicke (2003), Business Information Systems, 2nd edition, Prentice Hall, 2003. D. Chaffey and S. Wood (2005), Business Information Management, Prentice Hall, 2005. Turner C (2002), The Information E-conomy, Kogan Page Limited, 2002. Mutsaers E-J, van der Zee H., and Giertz H. (1998), "The evolution of information technologies", Information Management & Computer Security 6/3, 1998., pp 115-126 J.C. Henderson and N. Venkatraman (1999), "Strategic alignment: Leveraging information technology for transforming organizations", IBM Systems Journal, Vol. 32, No. 1, 1999., pp. 472-484 Vijay. K. Khandelwal and Jeff R. Ferguson (1999), "Critical Success Factors (CFSs) and the Growth of IT in Selected Geographic Regions", Proceedings of the 32nd Hawaii International Conference on Systems Sciences, 1999. Nolan L. R., and Croson C.D. (1995), Creative Destruction: A Six-Stage Process for Transforming the Organization, Harvard Business School Press, 1995.

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Somers M. T., and Nelson G.K. (2004), "A taxonomy of players and activities across the ERP project life cycle", Information & Management, 41, 2004, pp. 257-278 E. Turban, E. McLean and J. Wetherbe (2002), Information Technology for Management, 3rd edition, Prenitice Hall, 2002. P. Winggers, H. Kok and M. De Boor-de Wit (2004), "IT Performance Management", Elsevier, 2004.

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