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AN ASSESSMENT OF IT MATURITY

OF BH COMPANIES

M.Sc. Tarik Zaimović


Faculty of Economics, University of Sarajevo
Trg oslobođenja 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 oslobođenja 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 oslobođenja 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 cross-
organizational 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 e-
Business 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 • IT Era
o Initiation o Integration
o Expansion o Data administration
o Control o Maturity

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.

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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 e-
business 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

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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 Graph 3: Alignment of business and information
processes. 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 e-
guided 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 “IT value perception” model
Initiation − Purchase of hardware and software − IT is not considered important for
IT as
begins company’s success
facilitator
− Basic implementation of the central − Focusing on the reduction of the
components of the IS overall company operations costs
− The technology itself still does not − Access to information technologies is
have a significant impact on based on the automation of the existing
company’s operations /standard business functions
− Developing of the information systems − Business logics is focused on cost
Expansion
within companies becomes a new control, instead of the added value
"mantra" in company’s operations − ITs are seen as administrative support
− Each of the company’s organizational functions, while no special attention is
units wishes to have its own, tailored being given to their strategic
information system positioning
− Hardware and software are purchased − IT Manager usually reports directly to
rapidly a Chief Financial Officer
− 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 − IT is becoming a part of company’s
Control IT as
brought by automation/informatization everyday operations
service
process − IT processes and services are
− A serious control over the process of becoming an integral part of the
"company informatization” begins. overall business process
− Company management becomes aware − IT infrastructure is being optimized
that the IT and information systems are which leads to reduction of IT related
not the "magic wand" that can resolve costs
all of the problems that may occur nor − IT and IS bring added value in terms
they can be used as a "sole" source of of economy of scope and broadness
company’s competitive advantage − Automation of operations is raised
− The whole set of rules and procedures from administrative to management
referring to IT and information level
systems are being introduced − Approach to information technologies
− Users involvement (especially at the is now more based on quality
middle management level) in − Business logics is still focusing on the
designing and implementing optimization of costs
company’s Information System − IT standardization and organizational
constantly increases 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
Integration − IS are now being integrated with other − IT/IS are finally recognized as the key
IT as
systems, both in technological and factor for successful operations and
partner
organizational terms, thus becoming accomplishing of business goals
company’s ‘way of life’ − Information technologies/systems are
− First signs of technological becoming a part of company’s
discontinuity and a slight saturation of strategic advantages
a technology curve appear − Approach to information technologies
− First signs of need to replace the old is now based on expanding IT/IS
and dispersed systems appear outside the company (inter-
− Users are starting to take control over organizational systems)
the information system and the way − The goal is to use IT/IS for increasing
that IT "should" influence company’s company’s market share
operations

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− process of integration and setting − Business logics is focused on altering
Data
"organizational knowledge" starts, as the perspective of the role of IT in
administration
well as the development of a full company’s overall operations
organizational awareness of "all" − IT is becoming a key factor for
company employees of advantages that company’s operations, while the
the exploitation of technology is adoption of new technologies becomes
bringing a matter of survival
− new systems that the company is − The entire IT services segment is
developing are increasingly focusing adjusted to business strategy of
on strategic business goals increasing the effectiveness
− company is intensively developing
CRM and SCM systems as the
integrators of its operations in general
− Information systems and technology − Information technologies (IT)
Maturity IT as
are becoming part of the business represent a determining factor of the
enabler
strategy and planning, as well as overall company’s business strategy
permanent source of − IT are becoming the foundation of the
organization/company’s competitive company’s competitive ability and its
advantage dominant market positioning, i.e. the
− Return to the old way of operation is entire business would not be possible
not possible any longer and the without the information
company has accept the fact that the IT technologies/systems
and information systems are becoming − Approach to information technologies
part of its regular strategic planning 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 less than 10 11,4 %
researched companies are privately owned and 27,7 %
are state owned (5,7 mixed and 2,9 cooperative). Also, 10 – 50 20 %
22,9% are in financial services, 20% are in production 50 – 100 8,6 %
and 20% in trade, followed by 17% in services and 11%
in civil-works (3,6% provided no answer to this 100 – 500 40 %
question). 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.
It is obvious that the IT
Intensive - all of the
functions/services/departments are using IT
became a business necessity
Moderate - part of the key functions
and that it is far from the
informatized Data Processing stage.
Low - only few of the functions informatized
Research has shown that the
5,7 majority of companies use
the information technologies
25,7 intensively, meaning that at
least some of its
sectors/departments are
using IT. Total of 68,6% of
them are intensively using
68,6 IT, while 25,7% of

1
More on http://www.spss.com
2
Graph 4: To what degree, in your opinion your
More on http://www.prismresearch.ba
company uses the information technologies?

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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

2,9
don't have their information systems

Majority of departments within my company

28,6
have their own information systems

68,6
My company has an integrated IS

0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0

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

In these two questions,


respondents were asked Yes
to analyze their No

company’s IS. The No answer

result comes as a
28,6
surprise within the
research since 68,6% of 45,7
companies have
integrated IT systems.
On the other hand
28,6% of companies
have several 25,7
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

No answer

Not at all - our IS is not


54,3

connected with our


partners/suppliers/etc.

In a moderate degree - only


some parts of our IS are
28,6

connected to our
partners/suppliers/etc.

Intensively - our IS is fully


14,3

connected with our


partners/suppliers/etc.

0,0 10,0 20,0 30,0 40,0 50,0 60,0

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.

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