emphasis on functional applications to reduce costs. Stage II – Contagion Even though the computers are recognised as “change agents” in Stage I, Nolan acknowledged that many users become alienated by computing. Because of this, Stage II 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. A problem that arises in Stage II is that project and budgetary controls are not developed. Unavoidably, this leads to a saturation of existing computer capacity and more sophisticated computer systems being obtained. System sophistication requires employing specialised professionals. Due to the shortage of qualified individuals, implementing these employees results in high salaries. The budget for computer organisation rises significantly and causes concern for management. Although the price of Stage II is high, it is evident that planning and control of computer systems is necessary. Stage II Key points: There is a proliferation of applications. Users are superficially enthusiastic about using data processing. Management control is even more relaxed. There is a rapid growth of budgets. Treatment of the computer by management is primarily as just a machine. Rapid growth of computer use occurs throughout the organisations' functional areas. Computer use is plagued by crisis after crisis. Stage III – Control Stage III is a reaction against excessive and uncontrolled expenditures of time and money spent on computer systems, and the major problem for management is the organization of tasks for control of computer operating costs. In this stage, project management and management report systems are organized, which leads to development of programming, documentation, and operation standards. During Stage III, a shift occurs from management of computers to management of data resources. This shift is an outcome of analysis of how to increase management control and planning in expending data processing operations. Also, the shift provides flexibility in data processing that is needed in a case of management's new controls. The major characteristic of Stage III is reconstruction of data processing operation. Stage III Key points: There is no reduction in computer use. IT division's importance to the organization is greater. Centralized controls are put in place. Applications are often incompatible or inadequate. There is use of database and communications, often with negative general management reaction. End user frustration is often the outcome. Stage IV – Integration Stage IV features the adoption of new