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Nolan's Model

Stages of Growth Model (SGM)

A summary of the structure of Nolan's SGM (Stages of Growth Model), a general theoretical model which describes the IT growth stages that can occur in an organisation.


Richard L. Nolan developed the theoretical Stages of growth model (SGM) during the 1970s. This is a general model, which describes the role of information technology (IT), and how it grows within an organisation. A first draft of the model was made in 1973, consisting of only four stages. Two stages were added in 1979 to make it a six-stage model. There were two articles describing the stages, which were first published in the Harvard Business Review. The structure of the final, six-stage model is depicted in the diagram below: [pic]

Figure 1: Diagram showing the SGM continuum for growth/maturity The diagram above shows six stages, and the model suggests that: • Stage 1: Evolution of IT in organisations begins in an initiation stage. • Stage 2: This is followed by expeditious spreading of IT in a contagion stage. • Stage 3: After that, a need for control arises.

• Stage 4: Next, integration of diverse technological solutions evolves. • Stage 5: Administration/management of data is necessitated, to allow development without chaotic and increasing IT expenditures. • Stage 6: Finally, in the maturity stage, constant growth will occur. | |

Structure of the Model

Stage 1 – Initiation

In this stage, Information Technology is first introduced into the organisation. According to Nolan’s article in 1973, computers were introduced into companies for two reasons: (a) The first reason deals with the company reaching a size where the administrative processes cannot be accomplished without computers. Also, the success of the business justifies large investment in specialized equipment. (b) The second reason deals with computational needs. Nolan defined the critical size of the company as the most prevalent reason for computer acquisition. Due to the unfamiliarity of personnel with the technology, users tend to take a "Hands Off" approach to new technology. This introductory technology is simple to use and cheap to implement, which provides substantial monetary savings to the company. During this stage, the IT department receives little attention from management, and works in a "carefree" atmosphere. Stage 1 key points:

• user awareness "Hands Off".
• IT personnel are "specialized for technological learning". • IT planning and control is lax.
• emphasis on functional applications to reduce costs.

Stage 2 – Contagion

Even though computer systems are recognised as process change enablers in Stage 1, Nolan acknowledged that many users become alienated by computing. Because of this, Stage 2 is characterised by a managerial need to explain the potential of computer applications to alienated users. This leads to the adoption of computers in a range of different areas. Stage 2 presents some difficulties:

• Project and budgetary controls are not developed, leading to unavoidable a saturation of existing computer capacity and more sophisticated computer systems being obtained. • System sophistication requires employing specialised professionals, and, due to the shortage of qualified individuals, employing these people results in higher salaries. • The budget for the computer organisation rises significantly, and causes management concern. • Although the price of Stage 2 is high, it becomes increasingly evident that planning and control for the growth of computer systems is necessary.

Stage 2 key points:
• proliferation of applications.
• users superficially enthusiastic about using data processing. • management control even more lax.
• rapid growth of budgets.
• management regard the computer as "just a machine".
• rapid growth of computer use throughout the...
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