Conflict of Interest

I have long maintained that organizational politics can easily break all

types of information systems. Political factors have an impact on every stage of

the systems life cycle–from systems analysis to design to implementation.

Seasoned analysts and implementers are aware of this and usually attempt to work

around organizational politics. But there are times when it is just not possible

to work around such factors, as the following case study demonstrates.

The organization in question is a leading manufacturer of electronic

equipment. It imports large quantities of components that go into the products

it makes. The organization has manufacturing units all over India. Most of these

are in backward areas that do not have an international airport. Consequently,

imports are routed through Delhi and the organization maintains a customs

clearing office there. The office is staffed by managers on deputation from the

various units. The job of each manager is to clear consignments landing in Delhi

and dispatch them to the parent unit.

The consignment clearing process consists of several stages. The key stage is

that of paying freight charges and custom duties. A typical sequence of events

is as follows: the package arrives, freight charges are paid, customs duties are

assessed and paid, and the package is handed over to the company for dispatch to

the final destination. The package is stored in the airport warehouse till the

time of dispatch. The airport authorities allow free storage in their warehouse

up to a specified period. If the consignment is not cleared by the end of the

period, the airport authorities charge hefty demurrage for storage of the

package.

Demurrage charges can be prohibitive and it is in the interest of the company

to clear consignments as soon as possible.

Freight, customs duties, and demurrage charges are paid out from a pooled

bank account maintained at Delhi. The various units remit money into the pool

account when needed. The pool account is maintained by a finance manager deputed

to Delhi. The finance manager belongs to one of the units importing goods, a

fact whose significance will soon become clear.

The clearing process requires a lot of paper work and book-keeping. The

company was eager to streamline operations and hence initiated a computerization

project. The aim of the project was to develop software to track each

consignment through each stage of the clearing process. All accounting would be

automated and the accounting software would use a cost center approach to

allocate expenses to each unit. Consultants were engaged and systems analysis

started.

Most of the managers were enthusiastic about the computerization drive. The

curious exception was the finance manager. He maintained that allocating

payments to cost centers on a continuous, real time basis was too much work. The

case made out by him was that the company made consolidated payments on the

basis of consolidated bills received and he did not have enough resources to

indicate a breakup every time a payment was keyed into the system. He would

rather reconcile payments to cost centers on a quarterly basis. This was a

curious suggestion as it would require more work. The consultants enlisted the

support of top management and overruled the finance manager. The result was that

the gentleman became hostile and fought with the consultant’s personnel on the

slightest pretext. A lot of diplomacy was required to manage the implementation.

The finance manager continued to be hostile and refused to use the cost

center features in the software. The stalemate continued till, one day, the

gentleman abruptly left the company. And it was only then that the facts started

coming to light.

The facts were simple enough. Each unit paid an incentive to its managers

based on their productivity. In the case of consignment clearance productivity

was measured by two parameters: (a) the average number of days taken to clear

each consignment and (b) the total demurrage paid. Consignments would sometimes

be held up because of lack of availability of funds. In such situations, the

finance manager, in league with the manager from his unit, would divert funds

sent by other units to clear his consignments. Consequently, the performance for

his unit would go up in comparison with that of other units. Nobody noticed the

diversion since online accounts were not available. Computerization threatened

to give the game away and so the finance manager did his level best to throw a

spanner in the works.

The bottomline There is no structured way for dealing with situations like

this. All the analyst can do is keep his eyes and ears open.

Gautama Ahuja, a contributing editor

of PC Quest, runs a turnkey software development company, AHC Infotek, in Delhi