The use of information technology in the voluntary sector

International

Journal of Information

Management

(1993), 13 (94-l 12)

The Use of Information Technology in the Voluntary Sector A. BOYLE, M. MACLEOD, AND P.F. BURTON

A. SLEVIN,

N. SOBECKA

This paper presents the results of a study in the use of IT in the voluntary sector and assesses the stage of IT use in which the sector is located. It also examines the extent to which models derived from the profit-making sector, specifically those of Michael Porter, are applicable in organizations which are motivated to meet a social need rather than make a profit. The study found that most voluntary organizations are using IT for efficiency improvements, though a few are beginning to apply it to strategic decision making. Porter’s five-forces model of industry competition is redefined to illustrate the different situation of the voluntary sector. There is evidence of implicit competition in the sector, not least over funding, but cooperation is on a piecemeal basis and there is little in the way of an IT infrastructure which would facilitate cooperation. The paper concludes with an indication of further research needed.

Anne Boyle, Metta Macleod, Alan Slevin and Nina Sobecka are MSc research students and Paul Burton is a lecturer in the Department of Information Science of the University of Strathclyde. This paper forms part of a continuing study into the role and jmpact of IT in the voluntary sector.

‘ILWJNA,

I_.

(1991).

low. The Guurdian.

94

Sweet charity swinging 1X December, p. 23.

Introduction This paper examines aspects of the use of IT by organizations in the voluntary sector for efficiency and effectiveness. In doing so. it assesses the extent to which models of IT use applied to the commercial or profit-based sector are applicable in the very different context in which voluntary organizations operate. Specifically, we examine the applicability of Porter’s five-forces model of industry competition and consider briefly his value chain concept, together with a general stage hypothesis of IT introduction and use. Essentially, the organizations in this sector are concerned with meeting a social need rather than the pursuit of profit from the sale of goods or the provision of a service on a profit-making basis. Consequently, their use of IT for some advantage would not, intuitively, entail a commercial benefit, but would be aimed at improving the organization’s ability to meet that need. Their vuisorz d’etre is usually dictated by the existence of need, rather than, as in the profit making sector, creating or sustaining the need for a product in a market. Voluntary organizations, in addition, seek to initiate a benefit to, or change in, society, a change in the circumstances of those who require their help, and a change in public perceptions of the problem. The voluntary sector is not without economic significance. The Charities Aid Foundation’ claims 171 000 registered charities, growing at a rate of 4000 per year. They have an annual income of $17 billion, (more than 4 per cent of GNP), of which f310 million went to welfare organizations (e.g. caring for the elderly and children), f240 million to international aid charities and &75 million to heritage and environment causes. The report also indicates that donations of all types have increased by 74 per cent in the past 10 years, but that the average donation is increasing because the number of donors is falling. This, combined with the present government attitude that charities are an

0266-4012/93/02

0094-19

@ 1993 Butterworth-Heinemann

Ltd

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'CHILD, I. AND LOVERIDGE, K. (1990). I?-formation technology in European services: towards a microelectronic future. Oxford:

Blackwell, p. 7. M.E. (1985). Competitive advantage: creating and sustaining superior performance. London: Collier Macmillan. 3~~~~~~,

BOYLE

et a/.

integral part of state welfare services, places even greater pressure on voluntary organizations to provide services effectively and implies, as we consider later, an element of competition for the attention of a falling number of donors. Government attitudes are also encouraging the development of new, commercially-based purchaser-provider relationships between the voluntary sector and statutory bodies such as social services. Voluntary organizations vary considerably, not least in the needs they seek to meet. They include such diverse institutions as local authorities, hospitals, the police, voluntary organizations and political parties, charities. Even within the last two areas, on which this paper focuses, there is a difference between the people-oriented charities and institutions offering information. Organizations in the voluntary sector also vary in terms of funding, which may come through government support, trust funds, collections and other donations, or a mixture of these; they can have different legal status; their managerial and administrative structures can vary considerably; the user groups they serve can be very different, and their goals differ to a huge extent. This last is a particular feature of the sector, in that they strive to meet a need which has not been met by other organizations and do not often duplicate the effort made by others, whereas in the profit making sector organizations will often target the same type of product at the same market to create a niche for themselves. Though a distinct subset of the service sector, our voluntary organizations share some of the wider sector’s features, not least with respect to IT. Thus, information technology is not closely linked to expensive manufacturing plant: its introduction is more directly aimed at quality of service, rather than reducing costs or the organization of labour. On the basis of these considerations, it was felt that voluntary organizations would use IT as a tool for cooperation rather than competition, and we have endeavoured to assess to what extent this is true. In order to place this in a framework which could usefully be compared with the commercial sector, we based this assessment on Porter’s five-forces model and his value chain concept.’ Our aim was to adapt the model where necessary to describe the presumed differences in the voluntary sector. There was also an intuitive acknowledgement of the probability that IT would not, for various reasons, be in widespread use in voluntary organizations and our study sought to establish the extent and nature of IT usage. This was built around a generalized stage hypothesis relating to the introduction and use of IT, which proposes that organizational use of IT is characterized by movement through three stages or phases. Phase I is the automation of routine work for improved efficiency (including perhaps a reduction in personnel or at least avoiding any increase in staffing). Our hypothesis was that most voluntary organizations would only be at this stage in their IT development. In phase II, with a rise in expectations and expertise, organizations begin to improve effectiveness, rather than efficiency: they move towards management of information resources involving analysis and decision making, rather than management of technology. Finally, in phase III, the organization moves to a radical restructuring and possible goal change, facilitated by IT. The stage hypothesis is a popular one in the literature, and variants exist with greater or lesser differences (some writers propose four stages). Broadbent and Koenig have summarized a number of these variations and point to a striking commonality between

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them. They also indicate general agreement that (commercial) tions are now entering the third phase of information development.4

organizasystems

Methodology

4BKOADL3tNT,

M. AND KOENIG, M. (1989). The convergence of management attention upon information: lessons for lihrarianship. IFLA Journul, 15, pp. 21%232.

In order to test these hypotheses, we used a combination of interviews and questionnaires on a cross-section of organizations in the community care sector. The sample included ranged in size from local to national/ international, with a corresponding variety in aims, from helping sufferers of various illnesses, through collecting data on public health, to providing services to the disabled. The numbers of employees and branches varied considerably, from a handful of employees to thousands. In order to provide both a quantitative and qualitative approach, a structured questionnaire was sent to 30 voluntary organizations. This was augmented by semi-structured interviews with personnel from a smaller number of organizations (10). The questionnaire sought information on the nature of IT usage, including technology available, assessments of level of cooperation and competition, perceptions of the use of IT for advantage and levels of agreement with a set of statements on the effects of IT. The 10 interviews provided depth to the analysis and were used to assess the strength of a more sensitive issue, namely that of competition in voluntary organizations. In attempting to compare the use of IT in the voluntary sector to that of the commercial sector, we needed to ascertain if and to what extent IT was used for competitive advantage. Whereas competition is a familiar and core concept of business philosophy, it can be an uncomfortable term to those working in an organization where the bottom line is not finance but quality of service to individuals and society at large. We felt that an interview would better facilitate the raising of questions on this topic. Initially, it was intended to use early interviewing as an aid to questionnaire design, basing questions on the language and concepts used by respondents. However, this decision led us, to a certain extent, to change our tactics and take a broader look at the sector. The preliminary interviews were few in number but so rich in data, information and subsequent insight that we decided to increase the number of the interviews to include a wider cross-section of the voluntary sector. This meant that, while retaining the questionnaire as a source of basic background information, we focused more on the interviews as a way of providing the bulk of information from which our conclusions and analysis would be drawn. Our decision to expand the number of interviews was further prompted by the enthusiastic response from the targeted organizations to the proposed interviews. Nearly all showed considerable interest in the topic under discussion and were more than willing to participate. Not only was our initial contact ready to give us his or her time but in most cases we were passed on to the various departments within the organization, thus enabling us to carry out detailed investigations of the use of IT in fund-raising, accounts, campaigning etc. This enthusiasm may also explain the 60 per cent response rate for questionnaires. This led to an unexpected but very helpful source of information. While interviewing respondents in two organizations, we were told that

A.

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et

al.

their IT consultants had been informed of our survey and would be willing to give us an interview if we so wished. This allowed us to question experts in the field who were working with both the private and voluntary sector and who were able to compare their experiences of the different uses of IT in the two sectors. This proved very valuable on occasion, although, since it represents only a single chance occurrence, comments must be treated with circumspection.

IT usage in the voluntary sector

‘VOI.NLI

lion

UK

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(1989).

investing

in

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London: VOLNET UK,

The current use of IT in the voluntary sector is diverse. In a study carried out by VOLNET’ in 1988 among 505 voluntary and community groups in the Midlands, only 30 per cent of the groups surveyed used computers at work: the lack of use could be explained by the large number which had no premises or paid staff. Where IT was used, the main applications were word processing (80 per cent) and database management (60 per cent). Our survey found a much higher usage of IT-based systems, though this may not be entirely surprising, in view of the three-year interval. Over SO per cent of organizations we surveyed were using at least one microcomputer, and a similar number had fax machines. More sophisticated or more powerful systems were less in evidence: some 20 per cent used online services and slightly fewer had access to a mainframe or wide area network. Local area networks were only slightly more common, being used by 26 per cent of respondents. We found all organizations using word processing packages, and widespread use of database management systems (X3 per cent), spreadsheet (77 per cent) and desk top publishing (66 per cent). Given the low numbers using local area networks, it is not surprising that less than 30 per cent of respondents reported using electronic mail, though a much higher number (83 per cent) used fax machines. Respondents were asked to indicate which of 11 applications for IT were relevant. These were couched in general terms (‘Improve quality of decision making’; ‘Provide information to others at a cost’) rather than in specifics (‘Do you have a database?‘), and the results are particularly relevant to our understanding of the stage at which voluntary organizations find themselves. All respondents use IT to reduce the time spent on routine work (indeed, interviewees would often refer to the organization’s dependence on IT for clerical and administrative purposes), while 95 per cent saw it as a way to improve the service provided by making it more comprehensive or professional (however those terms were judged by the individual organizations). Again, given the lack of networking facilities, it is not surprising that few organizations used IT to exchange information with others inside or outside their field (22 per cent and 18 per cent respectively), though a large minority were providing information to others (as distinct from exchanging information): 50 per cent did so free, and 35 per cent charged in some way. These findings suggest that IT has been employed initially to automate existing manual administrative routines and to carry out clerical duties with greater speed and efficiency at reduced costs. Seventy-two per cent of respondents agreed that their use of IT allowed them to do more with fewer staff, and one spokeswoman commented that the IT resources they currently had available could possibly militate against having to employ a replacement if a member of staff left the organiza-

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tion - although this should not be taken to mean that IT will cause redundancies. All those surveyed felt the use of IT made the organization more efficient on a daily basis. Our results confirm the importance of this area to the sector but also largely place the organizations and their current activities within this stage; the automation of existing services is still the main focus of operation in the sector.

Information

resource management

In the context of resource management, it is worth noting the benefits to perceived effectiveness which organizations believe the automation of existing services can promote. Efficiency embodying increased speed and reduced costs is the initial criterion for installing IT: effectiveness and the benefits perceived in particular automated services follow. Effectiveness often follows in an ‘automatic’ manner due to the increasing sophistication of the equipment which automates routine processes, but can only be truly effective if accompanied by recognition of the need to manage information resources for strategic purposes. For example, the laser printer was seen by one group of interviewees as an important tool in improving overall efficiency; daily tasks are completed more quickly and with greater quality. One organization, however, used a laser printer specifically for promotional material aimed at trusts and funding bodies in order to suggest an image of efficiency and effectiveness in their operations. When targeting individual members of the public for funds, however, a qualitatively less efficient and effective printer was used, to limit possible accusations of over-spending by the organization in areas peripheral to their aims. Therefore, the use of essentially routine and efficiency-oriented equipment has grown to a level of sophistication whereby it may have important consequences in terms of organizational objectives. Though largely rooted in the first developmental stage, the perception of being able to use existing IT for strategic benefits is gaining credence. Information resource management highlights the need for effectiveness in utilizing IT. This also involves the desire to extend existing services, and 66 per cent of respondents believed IT enabled their organization to be more effective in achieving its aims. Other strategic uses of IT were in evidence: almost 40 per cent were analysing their markets with IT systems, while about one-third were targeting potential sponsors and sources of income in various ways, and almost half claimed to be improving the quality of their decision making. Information resource management is a higher level function compared to efficiency and can be defined as both the management of data resources and the management of information processes. The latter concerns the interaction of the organization with data resources and existing supporting technology for decision making and analytical purposes. Our research hypothesis that the development of IT in the voluntary sector would be concentrated at the first stage of IT development would seem to be confirmed by results showing that information resource management, though growing, is less well-developed in the voluntary sector than in the private. While 50 per cent of the organizations in our questionnaire agreed that IT improved the quality of decision making, out interviews suggest that this is a fairly limited practice, though one growing in importance. The first major constraint on the extended use of IT is that of finance.

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Two-thirds of our organizations felt that limited finances were the major constraint in making greater use of IT, even though it was seen as an effective way of improving the handling of routine administration and of extending existing service provision. Lack of money to buy, update or standardize equipment was a common complaint. However, equally pertinent to information resource management in many voluntary organizations at present is a lack of expertise. The ability to type in information on a word processor, access or enter information into a database or compile glossy reports are necessary and adequate skills for certain functions and can be learned relatively quickly. However, information resource management requires a deeper understanding of what IT can offer and the appropriate managerial and technical skills to exploit that potential. All of the staff interviewed, with the exception of one manager, freely admitted that they were only at the beginning of developing and understanding the possibilities of IT. Even in the one organization where funding was more forthcoming (due to its high profile in relation to its area), computers had sat unused by the last four people in charge of the office over the past two years. It was only due to the current manager’s computer and medical background that the equipment and subsequent networking got off the ground. In another organization, where a high level of IT had been supplied when it was established, a modem lay unused in the corner, the researcher in charge admitting he had no idea how it could be used. This absence of knowledge and skill was emphatically confirmed by the computer consultants we interviewed. Both work in the private and voluntary sector and both stressed that voluntary organizations needed more technological training and support after the installation of new equipment than would be required in the private sector. Whereas the latter would often possess a relatively clear idea of the possibilities IT offered and only wanted guidance in customizing a system to their special needs, voluntary personnel were rarely technocrats in any real sense of the word and often only had the vaguest ideas of what IT could offer, beyond the belief that computers were a good idea. Unless very well advised, voluntary organizations were more susceptible to mistakes in the choice of equipment and were more likely to fail to exploit it fully. Information resource management in the voluntary sector is currently far less sophisticated than in the private sector. It is carried out to a more limited extent and very much concentrated at the internal operation level and at the research stage. However, there are signs that it is growing at a strategic level for both cooperative and competitive ends.

Fund-raising Thirty-three per cent of organizations said they used IT to target sponsors. In this sense, IT is being used for competitive advantage and can be linked to Porter’s five-force field, in that voluntary organizations are trying to lock in their fund-raisers (suppliers). Given the awareness of a finite (and shrinking) pool of donors, three organizations interviewed were using database resources to seek out potential donor groups and individuals according to age, income, geographical location, etc. One organization uses its mailing lists to pinpoint areas that do not donate in order to compile cold mailshot targets. In another application, successes of different appeals were analysed in order to establish key

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donor sectors. Finding that a concentration of donations came from the Edinburgh area, a specific campaign was organized, targeting the Lothian region. The organization has also compiled a profit of the ‘typical’ donor in order to appeal to those individuals and so maximize funds. These uses of statistical packages and supporting technology are good examples of information being not simply stored in a database but retrieved, manipulated and analysed for productive decision making.

Campaigning While funds are a necessary basis for effective campaigning, all organizations interviewed used for IT for analytical and research purposes in order to provide information to government bodies, the press and other interested bodies and so promote their organizational aims. For example, new technology has added speed, depth and detail to the sectoral analyses of an area of concern carried out by one organization in order to highlight specific areas of need. In these examples, data resources and supporting technology were being successfully combined for analytical and promotional purposes.

Financial planning All the organizations interviewed agreed that the effects of automation in the accounting departments and the use of spreadsheets for budgets had filtered through to impact on the financial decision making process. One now prepares estimates for the financial year in a few days when previously this had taken over a month. The ability to plan and thus have greater control over cash flows was cited as one of the main benefits to the decision making process. Going beyond efficiency, one organization was attempting to set up a statistical program which could forecast the income from collection cans around the city according to location and previous donations. It was hoped to use this as a basis for decisions on the allocation of financial resources in advance.

Market segmentation Assessing the market for products and services is central to any commercial organization’s business strategy. Similarly, voluntary organizations need to identify clearly the individuals or bodies they are helping in order to provide an efficient and effective service. At present, IT is being used as a resource by both sectors to solicit information on their respective markets. However, it is at the stage of targeting, capturing and sustaining a market share where differences between information resource management in the two sectors are evident. As we have already suggested, voluntary bodies are not trying to create a demand or an appropriate environment for their goods or services, but are meeting a demand/need that is already present. This has important implications for market segmentation. Whereas the private company will try to differentiate its products or employ a cost leadership strategy in order to win over its competitor’s market share or create a new niche, segmentation in the voluntary market occurs in reaction to a new niche need or to help focus on a niche in order to avoid duplication of effort. For example, one organization 100

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was set up in direct response to two new niche needs: to provide a specific service to, and to monitor the increase in sufferers in the Glasgow area. We have also noted the recent policy of the Terrence Higgins Trust, following the emergence of a number of AIDS organizations throughout the UK. The Trust, while continuing their basic work in London, are redefining their aims to concentrate more fully on advocacy of their goals and the lobbying of government, rather than their previous intention to expand their services further north. This is not in order to compete but to be more productive in the service of AIDS patients.

Restructuring

of organizations

If the first phase of operational efficiency involves changing the way in which an organization operates and information resources management changes the way an organization uses information, then the third stage of restructuring can be seen to initiate a long term impact on the structure and working practices of an organization. Since the first stage has been reached and the second is only beginning to be fully exploited, one would not expect any huge restructuring of organizations in the voluntary sector. Any restructuring which was evident seems to have happened at a fairly superficial level. Local and wide area networks can change the framework of an organization by altering the way it communicates internally, but only 28 per cent of organizations use a local area network, though others intend to adopt networking systems. One organization, after scrapping a local area network which did not work efficiently, has raised again the idea of networking as a means of encouraging productivity gains, though these may be incurred at the expense of redundancies. Two organizations with wide area networks use them to communicate with their other branches around the country, but in general most organizations view their information needs in isolation and see little value in networking outwith their sphere of operations. Seventy-two per cent of organizations agreed that IT had enabled them to do more with fewer staff: these ranged from organizations of 1.5 members of staff to thousands. One had removed a lower grade post and given existing staff new responsibilities, but then found that more staff became necessary in some areas, as so many advantages were seen in the use of their database that they wanted to devote more manpower to it. This would imply that staff structures are beginning to be changed to exploit IT benefits. This phenomenon has been observed in other service industries: Child and Loveridge’ describe an intensified “use of (bank) counter staff alongside the introduction of new technology”, and Smith’ stresses the value of the approach: By all means automate-out

'CHILD p.

AND

LOVERIDGE,

0”.

cd.. Ref.

those fractions of jobs which can be automated, but view these as time-gains to be shared among several individual clerks and to be used in a whole range of possible ways. 2.

152.

Information technology: Taylorisation or human centred office systems. Science and Public Polirv. ----_I, 14 (No.-3), p. 165. ‘SMITH

,

S.L.

(1987).

Smith’s point is also valuable in highlighting the fact that IT may not affect every aspect of a job, and that the benefit from IT may not be as large as anticipated. A secretary carries out many tasks in the course of the day which do not involve typing: giving him or her a word processor

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sector

Great expectations: In: Computerization and controversy: valur conflicts und social choices (C. Dunlop and R. Kling, eds). “HAILY,

M.H.

(IWO).

PCs and productivity.

London: Academic Press, pp. 11l-1 17.

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will not speed up document filing and retrieval, taking shorthand, making coffee, etc. Recognition of this fact (relevant at other organizational levels) clarifies one of the reasons behind the current low payoff from investment in IT.’ The impact of IT on the practices of an organization is often determined by a centrally planned policy (or lack of policy) on IT provision, training and support. Our interviews suggested that there is, in the voluntary sector, often a lack of understanding of IT concepts, and that this is a major constraint: we have already seen that lack of expertise is a significant problem, and there is a recognition by some organizations that much IT is not being used to its full potential. The decision to adopt IT does not always come from a central coordinating organization, especially for small one unit bodies. Only 17 per cent of our population said the decision to use IT was out of their control and these were all large organizations. The adoption of IT is otherwise in the hands of individuals. The individual as an agent for change seems to be quite typical, with individuals’ attitudes regarded as crucial. One organization felt that the development of IT was a process of starting gradually and developing systems as necessary, keeping within a personal knowledge base but growing as knowledge broadens. This organization has now developed a system which can be operated by staff with little previous technical expertise, and until organizations achieve this, or hire the personnel with the necessary knowledge and enthusiasm (as opposed to technophobes or those not willing to learn), the use of IT could stagnate and not be exploited properly. The introduction of IT in the voluntary sector can differ from the private sector in that the functions of IT in the latter are generally differentiated between the strategic use made of IT by management and the purely administrative, clerical use by line employees. In the voluntary sector, IT is used for strategic advantage more broadly across the staff structure, as the attempt to meet needs is pervasive through the whole organization. Management also seems to have failed to ensure that staff have the proper expertise and training, implying a lack of full exploitation which prevents possible restructuring of practices, and also creating unnecessary upset among staff who are not confident in their use of IT. Half of our organizations pointed to a lack of expertise and 28 per cent pointed to a lack of information about IT as constraints in its use. One group felt that, should there be a decision to use IT, there would be little expertise and back up, while another identified a lack of support staff with the necessary skills. The lack of expertise could be remedied by outside consultancies. The consultant we interviewed felt that the voluntary sector lacks dynamic strategies when implementing IT systems and needs greater support and training. He believed that consultants could be used more and could identify the special needs of the voluntary sector, especially as the sector has less in-house expertise than the private sector. Otherwise, the wrong IT could be installed and used ineffectively. The consultants also suggested that there were fewer training courses in the voluntary sector than in the private, and others pointed to inadequate training from management downwards. Despite training from consultants and a local college for one organization, the use of computers was confined to word processing, as staff were not sufficiently knowledgeable or confident in other areas.

A. BOYLE et

9BOWEN,

w. (1989). The puny payoff from office computers. In: Computers in the human context: information technology, productivity and people (T. Forester, ed.). Oxford: Blackwell, pp. 267-271.

al.

The lack of a centralized strategy, the dependence on individual initiative and the lack of internal and external support, expertise and training, implies that the introduction of IT in voluntary organizations has rarely been properly planned and executed. IT systems have largely been placed over existing structures, rather than accompanied (preceded) by strategic planning for change to accommodate it. The difficulties caused by this approach have been experienced elsewhere,” but it appears that voluntary organizations have failed to learn from the mistakes of others. This has to some extent been inevitable, partly due to spending restrictions and partly to lack of existing IT expertise. Voluntary organizations have had to progress slowly, involving gradual reformation rather than revolution in the structure of their organizations. We feel these results bear out our hypothesis that voluntary organizations are firmly entrenched in the first stage of IT-based information systems, but, more importantly, that there are strong signs that they are beginning to move on from that point, towards strategic applications. For example, their use of IT to attempt to target sponsors and thus to increase their share of available funds, while communication and cooperation with other bodies was a lower priority, suggests IT is used more for competition than might be supposed, and it may be that voluntary organizations are beginning to look, in some respects, more like their commercially oriented counterparts. Intuitively, the concept of competition in the voluntary sector should be anathema. Groups in the voluntary sector are in the ‘business’ of helping, rather than ‘exploiting’, people, and are assumed to cooperate with each other in order to facilitate or maximize their service. However, competition does exist, although difficult to qualify, not to mention quantify. Voluntary organizations compete for limited funds and resources, whether from governmental or private sources, and there is pressure on organizations to make themselves more attractive to sponsors. They also realize the need to publicize their service to society as a whole and to raise their image, as it can be important to jockey for position in order to be in the forefront of the public’s mind. The ‘flavour of the month’ charity will bring in more funding. The use of highly developed IT in profit making organizations is taken for granted, and the initial outlay of resources, even for a relatively small organization, can usually be offset against a net gain in productivity and/or efficiency. The benefits of IT may also be appreciated in the voluntary arena, but there are forces affecting decisions to implement IT which are largely based on financial considerations. However voluntary organizations are financially supported, they put their resources at a premium, and any investment, be it in IT or anything else, has to be justified by the benefits it will confer on the institution in terms of meeting its goals. The sophistication of IT could be valuable to organizations in the voluntary sector. Word processing, spreadsheet, desktop publishing and database management packages can remove a great deal of routine work and help their administrations perform more efficiently. This freedom can allow workers in this field to concentrate on more productive activities as far as providing services to users is concerned. The scope and number of services would then increase. In contrast, the organization may prefer to reduce the number of staff and continue to provide existing services at a cheaper cost.

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UK,

"TICIIFK.

F.

technology

sector

op. cif., Ref. 5. (19861. The use of information in voluntary organisations. In:

"'VOLNFT

Social no&y

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experimetz& (C. Ancelin,

with

information

tech-

ed.). London: FAST. 'Z~~t~~t~~~~~f~, 5 (lY88). Consumers, computers and the public service: an ovcrview of European trends. In: Informutiorl technology and the humun .servicev (B. Glastonbury, ed.). Chichester: Wiley. w. 26-38. BLIR'TON, P.F. (19%). Information technology and organisational structure. Aslih Proceedings,

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3), pp. 57-6X.

Moreover, the introduction of IT can lead to a restructuring of the organization. IT could mean fewer staff are needed, or that the same number of staff are used in different ways, possibly upgrading them to a higher responsibility and giving them different functions, again allowing more of the organization’s resources to be devoted to the provision of services. There is evidence of an appreciation of the potential of IT in the sector, as our earlier analysis made clear. The VOLNET survey concluded that over 75 per cent of their sample considered the outlay of buying a computer system was justified and expansion was planned. Those who did not use IT may have considered it was unnecessary to the work of their organization, had an antipathy to IT itself, or may have lacked awareness of its possible benefits. VOLNET identified the sector as having an ‘information poor’ and an ‘information rich’ division, which would probably continue to polarize. I’) The successful use of IT is, however, more open to question. Paul Ticher considers IT provision itself cannot solve the problems of an organization unless it is planned for properly and is appropriate to its needs. The indiscriminate adoption of IT is encouraged if an organization has unclear criteria for success, unstable and/or low funding, and a lack of independent and informed advice and evaluation, all of which we have seen in the voluntary sector. Inappropriate IT imposed on an organization can prove inefficient and be a waste of resources, as well as creating an upheaval in working practices, conditions and relationships. For example, inappropriate uses were made by some organizations of Prestel which did not satisfy their needs. The content was not judged as highly as the medium.” The use of electronic networks has to have a human relationship network already in place as a foundation, and it should be realized that human contact is often sufficient and even preferable to electronic mediation. Commercial packages available are often better suited to the profit-making sector and where commercial consultants have been used, their advice can sometimes be inappropriate to the ethos and aims of the organization. Where organizations do use IT more usefully, it occurs when IT is adapted to the needs of the organization and its users. Evelyn Blennerhasset, however, considers IT could be more dynamic, viewing it as a ‘double-edged sword’,” which can reinforce existing structures and policies or can promote change. Generally, Europe has adopted a conservative view of IT, in which it is seen as a means of doing the same job cheaper or faster, rather than as a means to review the strengths of existing practices. She sees shortage of funding, lack of awareness and limited IT knowledge as being the reasons behind this approach, with bureaucratic constraints providing an additional hindrance. She concludes by saying that as computerization becomes more pervasive and those involved become more knowledgeable about IT, more profound changes may have to be made in organizational structures and processes and in the type and quality of services offered to which we suggest are now becoming visible. The users, changes double-edged sword metaphor is applicable in many types of organization’3 and the voluntary sector is not unique in this respect. It might usefully benefit from the lessons of other sectors, however. Initially, we feel that voluntary organizations, with their service and caring ethos, will tend towards increased de-centralization and a general openness of structures, but this has still to be tested.

A. BOYLE et ai.

Q Potential entrants

Possibility of new entrants

Rivalry

among

Bargaining ~power of purchasers

Threat’ of new entrants

0 Substitutes

Figure 1. Porter’s five-forces model (adapted from Porter, op. cit., Ref. 3, p- 51

IT in the commercial sector

“POR7.ER,

0~.

Cit.,

Ref. 3, &J,5.

Much has been written about the use of information technology to improve competitive performance in the profit-making sector of the economy. IT is viewed as a means to target markets, alter products and scope and modify external and internal operations to gain an edge over business rivals. However, when we look at the voluntary sector, the identification of the role of IT and its potential become more difficult to quantify and rationalize. Fundamentally a business is involved in the physical exchange of goods and services at an agreed price, delivering tangible benefits to its customers. In the voluntary sector, there is rarely a charge for the services provided and funding is obtained from various external sources, including the public. However, both sectors can use IT to aid them in their daily operations and assist in strategic planning. The questions to be answered include: do the central tenets of the profit making business apply to the voluntary area?; does rivalry exist between charities?; will voluntary bodies use IT to gain competitive effectiveness, together with organizational efficiency? Information technology in the commercial sector is seen as a means of adding value to the products and services of a company. In doing so, companies are able to adapt to change and gain a competitive advantage over rivals. The strategic use of IT has become feasible largely because of the reduced costs of information processing and the IT products used in company operations. The company which can integrate information strategically into every area of its operations can gain advantage over its competitors. Michael Porter has identified the five major forces acting on a firm’s industry structure which can be affected by IT in ways that are strategically significant (see Figure 1). In Porter’s words: I4

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sector

The five forces determine industry profitability because they influence the prices, costs and required investments of firms

in an industry -

the elements of return on investment.

Buyer

power influences the prices a firm can charge, for example, as does the threat of substitution. The power of buyers can also influence cost and investment, because powerful buyers demand costly service. The bargaining power of suppliers determines the costs of raw materials and other inputs. The intensity of rivalry influences prices as well as costs of competing in areas such as plant, product development, advertising, and sales force. The threat of entry places a limit of prices, and shapes the investment required to deter entrants.

“WISEMAN,

;gms.

106

c.

(1988). Srruregic injbwmfion

Homewood, IL: Irwin, pp. 255-

We suggest below the modifications to this model which are required in order to make it applicable to the voluntary sector, where many of these factors appear to have no place. Who, for example, are the buyers and suppliers of a charitable organization? Information technology can be utilized in a strategy to control each of the forces, and thus maximize return on investment. A supplier could, for example, be ‘tied in’ to an inventory control system, or his power reduced by a sophisticated quality control system. Buyer power can be affected with similar ‘tie in’:terminals to place orders selected from an online database have been used effectively by American Hospital Supplies to lock hospitals into their ordering and supply system.” This also has the effect of raising both barriers to new entrants, who have to match the service in some way, and switching costs to the buyer of substitute products and services. Substitutes may also be fought with systems which produce customized products for particular market segments. Finally, all of these potential uses will affect inter-firm rivalry. Often it will intensify that rivalry, resulting ultimately in an industry shake-down: it may, however, encourage greater cooperation in some areas, not least because of high development costs. Within the organization, IT has a major role to play in developing competitive advantage through an optimization of benefits accruing in each part of the firm’s activities. The concept of the value chain helps in the analysis of areas where a sustainable advantage can be made. A firm’s value chain refers to a stream of interdependent activities connected by linkages. These value activities divide the firm’s operations into technologically and economically distinct processes which it must perform to do business, for example, marketing, procurement etc. The information content of one value activity can have a direct impact on the cost of carrying out another. The strategic use of IT in performing one activity may therefore optimize the benefits to be accrued from another company operation. A company must view such trade-offs in a strategic light in order to formulate cohesive plans for creating a sustainable competitive advantage. It is important to understand that the value chain of one company is distinct from others, as is the very nature of their business, but all are subsumed in the industry’s value system. IT enhances the company’s ability to exploit linkages internally and outside its own stream of activities. A firm will gain a competitive advantage when it coordinates itself within its own value chain and with the value activities of buyers and suppliers, and so its strategic plans must contain a scheme containing linkages of value activities within its own structure while relating these linkages to external value streams. Various strategic and oper-

A. BOYLE et a/.

ational combinations have been identified. A leading edge strategy refers to the use of IT for research and development projects which may ultimately become ‘Star Investments’ within an information system at the forefront of the firm’s competitive performance. At the other end of competitive priorities, a strategy of scarce resource, involving the intensive control of money spent on IT, may exist within a factory system attempting to reduce daily running costs, while gaining little in the way of competitive advantage. Plans can be mixed among the firms’ departments but must be linked to a generic corporate strategy which will control the types of opportunities which the firm will pursue and ensure optimum matching of strategies and IT applications.16 Particular systems for utilizing IT meriting relevant investments will follow from structured planning throughout the organization. The importance of an integrated, strategic approach to the management of IT increases with the pace of technological change. The firms which succeed are those which instigate rather than react to changes in the industry. New opportunities may be capitalized on the possible threats negated through the effective analysis and implementation of integrated strategies. We feel that there is scope for further investigation of the value chain in voluntary organizations. This being the case, to what extent can we modify Porter’s five-forces model for the voluntary sector? We will begin our description of the forces in the sector by taking a closer look at perceptions of the nature of competition and/or cooperation and how IT is used for advantage.

Cooperation

16REMENYI,

D.S.J.

(1988).

increase

profits

with strategic information systems. Chester:

NCC

Publications,

pp. 4&50.

Man-

and competition

Though it can be difficult to judge relationships between organizations in the voluntary sector, we noted from our interviews that in the voluntary sector, organizations compete for a limited volume of sponsorship, whether private or public. They do not, however, compete for a share in the market, because they attempt to fill a service gap rather than create one. Occasionally, their service may overlap with that of another similar organization, in which case duplication of effort has to be avoided. In the commercial sector, organizations offer similar products or services in direct competition, whereas in the voluntary sector, organizations attempt, with or without explicit agreement, to cover different areas. To meet needs to the full, some degree of cooperation is essential between groups in the voluntary sector, and shared information is of benefit to organizations. Our data point in general to voluntary organizations cooperating rather than competing with other organizations both within their own field and in general (though there is an element of disagreement with the view that IT has increased levels of cooperation). Eighty-three per cent saw themselves as cooperating to some extent with others in their own field, while 51 per cent felt that there was cooperation in general. Only 11 per cent of our survey disagreed that IT has increased cooperation with organizations in the same field and only 23 per cent disagreed to some extent or another that it had increased cooperation with organizations outside their field. However, only some 40 per cent actually used IT to exchange information, while less than 30 per cent agreed that their use of IT had increased the levels of cooperation with others working in the same area of need. The majority, in fact, expressed no opinion when asked whether IT had affected levels of

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cooperations between organizations. Our data suggest that there is confusion on this subject between the perceived ethos of the voluntary sector and the reality. Cooperation is valued highly, as we expected, but in IT terms, there is little happening at present. This is not entirely surprising, given that voluntary organizations are largely in the first phases of automation, which is centred in the organization itself. What cooperation does exist is not yet facilitated by IT, though we would expect this to change gradually as the organizations move into phase II and increased strategies uses of IT. The confusion is indicated by comments such as those from the spokesman for one organization, who said that they strongly agreed that they cooperated with organizations in and outside their field, but they have no local area network, wide area network or online facilities, nor do they use IT to exchange information, although they do have electronic mail facilities. Two other organizations did not perceive themselves as using IT to increase cooperation with other organizations, though both have wide area networks and are online, suggesting that they only use these to contact other branches of their own organizations. VOLNET (UK) in England has a voluntary sector community database which includes a full document delivery service which has been made available to any subscribers to their system since May 1989. Other organizations in our survey had an online information service, viewdata systems and online facilities through a wide area network, one with plans to extend this to European links. One group did not want to link directly as they felt it would adversely effect their autonomy, though they had a very progressive view towards exchanging information, in that they felt other organizations should be able to access their database and use this service to generate income: unfortunately, their status under the parent body did not permit this. For others, cooperation was on an ad hoc basis: for example, the use of fax facilities during one day national/international awareness campaigns. The consultant interviewed knew of no organization which had developed a mailing list for appeals which they were prepared to give to another organization or make available through a network. He felt that the voluntary sector is competitive but that it will always deny it. He is often approached by organizations which have seen IT being installed elsewhere and have decided that they need a similar strategy to cut costs and assist campaign planning, which may be an implicit acknowledgement of competition, or simply a desire to emulate observed successes. As an indication of attitudes towards new entrants to an area of concern (and thus of direct competition), respondents were asked to indicate agreement with any or all of three statements. Forty-four per cent would welcome a new organization in the same field, but 67 per cent were worried about duplication of effort and 44 per cent were concerned over the effect on limited funding sources. There are attempts to foster ‘charity loyalty’ and to differentiate, with public profile of great strategic importance. One group had to compete for funds within a large parent body, doing so by pointing to proof of productivity gains as a bargaining tool. Strategic uses of IT suggest a level of competition, with 39 per cent using IT to analyse markets and 33 per cent to target potential sponsors. A major coordinating body is planning a massive database for use by its members, which does seem to be a breakthrough in information provision across the board, although it will not be online and organiza-

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tions will probably have to pay for the service. This database would reduce the duplication of effort which plagues the voluntary sector and could coordinate the whole sector and its public relations. The consultant believes that each voluntary organization currently sees its requirements in isolation. There are computers throughout the sector and it has reached a point where there was a great need to develop a cohesive sectoral strategy to improve the exchange of information between organizations and generally to maximize the overall funds of the voluntary sector. It is, however, a necessary first step to have a human network in place to form a foundation for an electronic one and there must be doubts regarding the practicalities of a freer exchange of information, due to the need to ensure privacy and security and to abide by the Data Protection Act. While there seems to be a greater perception of cooperation among groups in the voluntary sector than there is of competition, the use of IT for cooperation is ad hoc and not generally highly developed, although further developments are planned. The use of IT for competitive advantage is perceived and exploited to a limited extent but may develop with increasing awareness of competition. As we suggested earlier, our initial hypothesis of cooperation rather than competition in the voluntary sector has now become rather more ambiguous.

The five-forces model redefined As a result of our survey, we can now begin a redefinition of Porter’s model to reflect the current situation in the voluntary sector. In view of the evidence suggesting a move towards more strategic uses of IT in the sector, this redefinition may have to be short term. Combined with all other pressures on voluntary organizations, it seems likely that the picture will change in the near future - indeed, it has already begun to change. The attitude of Government, which sees voluntary sector organizations as an integral part of the welfare state, has mean that they are already taking on the role of providers of services to the statutory bodies, and are therefore having to compete with others to acquire these roles: they may also buy-in services from the statutory bodies on behalf of their own clients. At present, this may be true only of some organizations within the sector (e.g., those providing services to the handicapped), but there is every possibility that the practice will continue and spread. With this important point in mind, we redefine the ‘buyers’ group as the clients whose needs determine the nature and operations of an organization. There is therefore a very different relationship from that in the commercial sector. IT may be used to research and target the need for a service, to monitor and answer the need, to prioritize the greatest need among various clients and to monitor trends. It may also be used to channel services to those who need them. The ‘suppliers’ not only provide voluntary organizations with materials, but also with funds. The role of IT is increasingly to target particular funders and thus to maximize an organization’s influence on its ‘suppliers’, tying in funders. In the sense of targeting funders, IT can be a competitive weapon and this usage may well increase. IT is also used to improve efficiency and make the operation of an organization more productive and cost effective, thereby justifying current and future budgets and demonstrating ‘value for money’ to funders. ‘Substitute 109

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services’ can come from other sources, of which central and local government are the most obvious, though in the current climate in the UK at least, the most unlikely. Both substitutes and new entrants are competitors in an environment of scarce resources as well as potential cooperators in the realm of fulfilling social needs. However, IT is not currently used strategically as a barrier, either to new entrants or to existing organizations in a similar field, though some new entrants may perceive it as such. It seems likely that it will only be seen as a major barrier when it is used more extensively in a strategic role. IT can be used to differentiate a niche for an organization, and to keep redefining that niche in the light of new entrants and substitutes to the field, an essential task, as duplication of effort will exacerbate the competition for funds. It is likely that a new entrant will attempt to define a new niche, rather than seek to move into an existing one. There may, however, be overlap. In contrast to commercial organizations, where any loss of the customer base is seen as a negative trend, some voluntary organizations may welcome a reduction in the numbers of the clients. They would be able to maximize their resources for fewer clients, reduce their workload and redefine their market niche. For example, if the government set up a similar body which duplicated the work of a charitable organization, this might allow it to provide a more qualitative service to its existing clients. Current UK government policy makes this unlikely, as it is content to allow the voluntary sector to function as part of the state’s welfare provision. The redefinition of aims by the Terrence Higgins Trust discussed above is an example, caused by new entrants to the field of AIDS counselling and information provision. Of course, if a reduction in demand was due to the elimination of the particular need or problem, this would presumably be doubly welcome. The ‘internal rivalry’ identified by Porter is the concept of competition highlighted above. In the voluntary sector, competition is an implicit force in the search for funding, rather than the explicit competitive force which is in the profit sector. The rivalry exists, as we have already said, in identifying means of funding and to capitalize on this by targeting particularly useful sources such as loyal donors. The marketing capabilities of IT become more apparent in this area, and we would expect this to increase as voluntary organizations move into phase II of the introduction of IT. However, a significantly different force in the voluntary sector which exerts the greatest pressure on the sector is that of need. The existence of the sector itself and of individual organizations within it is dictated by need: as we have already emphasized, the mission of fulfilling a perceived need is always paramount and the pressure to identify the need, define and analyse it, monitoring and redefining when necessary, and then evaluating satisfaction is a major factor. We have therefore redrawn Porter’s model to suit the voluntary sector, and present it in Figure 2.

Conclusion The existence of competition and/or cooperation and their role within the voluntary sector is difficult to quantify. There are fundamental differences in philosophy between the commercial sector, based on the pursuit of profit and with various sophisticated managerial and organ110

A. BOYLE

Pressure redefine

et al.

to niche

t

Pressure to identify niche

I

0

Substitutes

Figure 2. Five-forces model

of the social profit sector

izationai strategies, and the voluntary sector, charged with identifying and serving a need in a financially restricted environment. Our interviews highlighted an overall lack of perception of the existence of competition or an unwillingness to admit its existence, but as the use of IT develops within the resource management stage, awareness of the importance of competition is growing. Meanwhile, cooperation proceeds on a piecemeal basis with resources shared intermittently and in an unstructured manner. At this stage, there is little in the way of an IT infrastructure which would facilitate greater cooperation. Greater use of wide area networks and the possible institution of a central database, as well as further online cooperative developments such as VOLNET, would go some way to establishing a cooperative framework within which IT strategies could be formulated. Paradoxically, cooperation may be advanced by the unlikely driving force of competition. In the USA, in response to public dissatisfaction with a proliferation of ‘competing’ charities, funds are centralized in a community chest, with coordinated fund collection and allocation. Such ‘joint activity’ may improve the sector’s bargaining position with funders and facilitate the entry of new need serving organizations by providing a coordinated financial and strategic base. The alternative would be the fragmentation of the various spheres of the voluntary sector into individual entities competing on strategies of cost leadership and differentiation. Whatever path is chosen depends on prevailing environmental and market conditions, as well as the attitudes of the larger voluntary agencies. It seems evident, nevertheless, that IT can provide increasing strategic value within cooperative structures. This points to a fourth developmental stage in which cooperation between organizations, often facilitated by IT through networking and shared equipment, may form the basis for the redefinition of the entire ‘industry’ structure. The convoluted picture we have painted is not altogether surprising, considering the formative and preliminary nature of studies of the 111

Use of IT in the voluntary sector

various voluntary sectors and the novelty of IT applications in these organizations. Our interviews elicited the distinct impression that cooperation has intrinsic value for the voluntary sector and more affordable IT would help to direct the strategic benefits to be derived from cooperative structures. Though IT is concentrated in the area of organizational efficiency with the emphasis on the automation of existing resources, strategic use should increase in scale and sophistication as IT becomes more affordable and expertise in its utilization is extended. While there appears to be little overt intent to gain competitive advantage over other organizations in the sector, the use of IT to ‘indirectly’ facilitate this end is increasing. We have intended to present the dominant perceptions existing within the voluntary sector regarding the existing or potential use of IT for competitive advantage. Our analysis is broad and wide ranging, but we believe the main themes have been approached. Further study enlisting larger samples and encompassing all of the diverse fields within the sector will add further substance to our conclusions. Continuing study should concentrate on: (i)

The influence of managerial and occupational structures on the implementation and use of IT in voluntary organizations and the possible effects of IT on such managerial and occupational structures; (ii) The planned development of IT within organizations in relation to funding constraints and opportunities; (iii) The specific use of IT in voluntary organizations for cooperative as well as competitive advantage; (iv) Following from this, an analysis of the feasibility of a community chest framework for cooperation within the non profit sector in the UK; (v) As the strategic use of IT expands within the voluntary making sector, further analysis of the importance of the value chain in this context would be valuable, with investigation of managerial techniques for promoting value linkages between need, funder, client, substitutes and new entrants; study of the links to be made between the need serving motive of the organization and the use of IT for adding value to competitive processes, and the possible utilization and coordination of linkages between the value chain of a voluntary organization and the wider environmental and sectoral value system. Research in this area could help voluntary organizations develop a systematic method for analysing discrete service activities indicating areas where value may be added through the use of IT. These are possible avenues for further investigation requiring a wider geographic spread of study and possibly utilizing more precise and measurable hypotheses. The groundwork we have laid provides a guide to the dominant attitudes existing in the voluntary sector and indicates the prevailing trends open to the future in-depth exploration.

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