© 2009 pearson education, inc. publishing as prentice hall the top is job chapter 2 information...

© 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Top IS Job

Chapter 2Information Systems

Management in Practice

8th Edition

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Today’s Lecture

Introduction Where is the IS organization headed?

The escalating benefits of information technology Traditional functions are being “nibbled away” New roles are emerging Toward “IS Lite”

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Today’s Lecture cont’d

The CIO’s responsibilities CIO’s roles in 3 eras

Leading Creating a vision by understanding the business

Governing Establishing an IS Governance Structure

Investing Shaping the IT portfolio

Managing Establishing credibility and fostering change

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Today’s Lecture cont’d

The Office of the CIO Whither CIOs Conclusion Questions and Exercises References

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Introduction

Growing demand for IT managers in the U.S. and worldwide.

Management of IT in past 50 years has drastically changed. Basic functioning cost reduction decision

support inter-organizational supply-chain and “business eco-system”

Onus on top executives to provide IT vision and leadership.

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Where is the IS organization headed?

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Escalating Benefits of IT

Changing technology and evolving IS role since 1950s. (a parallel process)

“Waves of Innovation”: Wave 1: Reducing costs Wave 2: Leveraging investments (continuous improvement) Wave 3: Enhancing products and services Wave 4: Enhancing executive decision-making Wave 5: Reaching the consumer Wave 6 (new): Leveraging partnerships through supply chain

management or other forms of collaboration

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Escalating Benefits of IT (cont’d)

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The SABRE System (American Airlines) Case example of “Waves of Innovation”

Evolution: Handwritten reservation system (1950s) to Web-based system (2000s).

Waves 1 and 2 (1960s) SABRE (CRS) built to reduce costs of making airline

seat reservations. ROI on staff expenditure.

Wave 3 (1970s) System enhanced to span organizational boundary for

travel agents (provide direct access to CRS)

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The SABRE System (American Airlines) cont’d

Wave 4 (late 1980s) Revenue Management System (provide decision

support to managers) under SABRE Airline Solutions (new division).

Wave 5 (1990s) System extended to provide direct Web access to

customers (CRS, flight information, movie etc.) Wave 6 (2000s)

Sabre (small letters) spun off from AMR in 2000, leveraged partnerships and technology.

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The SABRE System (American Airlines) cont’d Throughout waves of innovation, strong IS

involvement was crucial. Evolving with changes in technology

From money-making to extending organizational boundaries to spinning off.

So what is the function of the IS organization?

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Traditional Functions are Being Nibbled Away Traditional set of responsibilities for IS

Managing operations of data centers, local and remote systems and networks

Managing corporate data and legacy systems Performing system analysis and design and

constructing new systems Planning and integration of systems Identifying opportunities for new systems

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Traditional Functions are Being Nibbled Away cont’d Trends that are moving traditional roles out of

IS: Distributed Systems

Migration of software applications to user areas Ever more knowledgable users Better application packages

Systems development to integration Outsourcing

Based on fiscal and managerial considerations

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Traditional Functions are Being Nibbled Away cont’d

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New Roles are Emerging

IS involves a cluster of functions: Run operations Develop systems Develop architecture Identify business requirements Create IT-enabled innovations

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New Roles are Emerging cont’d

Different set of skills and management strategy needed for each function: Maximize efficiencies of IT operations Better allocation of IT personnel time Prioritize resources to demonstrate usefulness of

new software projects IT-enabled business innovations

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New Roles are Emerging cont’d

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Toward IS Lite

IS started “centralized” and then evolved into “federal” model.

Some things (e.g standards, operations) centralized Others (e.g. applications development) dispersed to best

meet local needs.

Solution: shift attention from roles to processes IS Lite: managing three overall processes

Driving innovation (dispersed) Managing change (dispersed) Supporting infrastructure (centralized)

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Toward IS Lite

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LifeScan

Case example: The “Federal” Model Johnson and Johnson subsidiary New CIO with business-IS alignment agenda 3-stage framework that is focused on execution

and performance measurement (value, on time, budget)

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LifeScan cont’d

Strong project management, not allowing scope creep (business value, on time, within budget) Emphasis on staff with leadership and brokering skills Outsourcing (Tata, J&J outsourcing agreements)

Adopt J&J quality-driven culture into IS processes and working closely with business units for alignment every step of the way.

Centralization of policies, procedures etc. All IS projects business led and locally owned by

business units.

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The CIO’s Responsibilities

Evolution of CIO’s job emphasis over last 20 years Almost like a “bell curve”

80s: Chief architect (strategic use of IT) 90s: addressing business issues (more than

technology manager) Late 90s to early 2000s (forefront role) Mid 2000s onwards: slide back toward back seat--

more responsibilities, lots of justification and less $

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CIO Roles in Three Eras

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The Mainframe Era Predominated 1960s – early ’80s Role of DP / IS manager = operational manager of a

specialist function Distributed Era

In the ’80s as PCs become commonplace LANs and WANs linking computers Took on 4 more roles:

Organizational designer Technology advisor Technology architect Informed buyer

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The Web Era Started in the mid-1990s for some Arose from the emergence of the Internet

(especially WWW) as a business tool Era is still in “infancy” but add to the CIOs job, the

role of business visionary Relationship between CEO and CIO vary

along a wide spectrum.

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CIO Roles Today

Leading Creating vision by understanding the business

Governing Establishing an IS governance structure

Investing Shaping the IT portfolio

Managing Establishing credibility, managing IT functions,

and fostering change

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Leading: Creating vision by understanding the business

Understanding the business Encourage project teams to study the

marketplace Concentrate on lines of business Sponsor weekly briefings Attend industry meetings with line executives Read industry publications Hold informal listening sessions Partner with a line executive

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Creating a vision of the future and selling it CIO must be proactive and not simply reactive

A leader not a follower What is a vision?

Statement of perceived future Why develop a vision?

A vision of a desirable future can provide stability when it sets a direction for an organization

Selling the vision

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British Petroleum (BP)

Case example of creating a vision of the future and selling it 150 business units in 100 countries

Each with own balance sheet and performance criteria Need to reconcile business unit independence

with overarching HQ strategy (“speed matters”) Strong core values and operational excellence How can IT be a value-add?

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British Petroleum (BP)

John Leggate’s “Digital Business” vision. Technology provider to strategy-creation role Strategy, architecture, differentiated services

based on business streams (processes) Living on the Web Socializing technical directions (adoption) Going forward: Foster learning and focus on

explanation (assimilation)

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Creating a vision of the future and selling it (cont’d) Encouraging champions of IT projects

“Boundary-spanner-in-practice” Typically someone with authority Need information Need resources Need support

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Aetna Life and Casualty

Case example of creating a vision of the future and selling it Vision: “breakthrough technologies” Sought out business champions Pilot studies

Feedback for new technologies experimentation Steering Committees Challenges

Adoption (attention and use) Value (beyond piecemeal payoffs)

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Governing: Establishing an IS governance structure

Definition: IS Governance “The assignment of decision rights and the

accountability framework to encourage behavior in the use of IT.” (Weill & Woodham, 2002)

Governance versus management Governance is about deciding who makes

decisions. Management is about making decisions once

decision rights have been assigned.

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Importance of corporate IT governance Large and diverse IT assets Striking a balance between global and local

needs IT portfolio (in sync with business needs)

Assigning decision rights Governance style

Definition: who has a decision right and input right. Six governance styles

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Duke Energy International

Case example of IS governance Diverse portfolio of natural gas and electric

supply, delivery and trading businesses. CIO: “When am I free to decide on my own versus

when should I involve others?” I involve others if the consequences of my actions will

come to bear on those others. I do not involve others if the consequences of my

actions will come to bear just on me. I inform others when the consequences of my actions

will be of benefit to others.

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Investing: Shaping the IT Portfolio

Diminishing marginal increase today but still preposterous amount of IT investments.

Two perspectives in IT investment: Strategic view

What to invest in? Tactical view

How to make investment decisions?

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A Strategic view of making IT investments McKinsey Global Institute study of “new economy”

IT, competition, innovation and productivity in virtuous circle

Targeting IT investments Prioritizing on “levers that matter” = greatest

productivity Timing of IT investments

Based on company needs and goals

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Investing: Shaping the IT Portfolio cont’d

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Sequencing of IT investments Wal-mart versus Kmart case example

Complementing IT investments “The whole is not the sum of its parts” (synergy) Complementarities between management practices,

business processes and technology

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Wal-mart versus Kmart

Case example: Sequencing and timing IT investments Wal-mart

Step 1: installed systems to automate the flow of products in its internal supply chain

Step 2: turned outward to suppliers, coordinating its own operations with theirs

Step 3: turned to customers to better plan its merchandising mix and replenishment

Step 4: data warehouse

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Wal-mart versus Kmart

Kmart Mistake: used IT to target its marketing promotions

versus investing in supply chain Result: increase in demand from successful

promotions could not be met due to problems getting the products into stores in a timely fashion.

Result: lost sales and revenues

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Investing: Shaping the IT Porfolio cont’d

A tactical view of making IT investments Portfolio (holistic) approach to deciding on how to

make IT investment decisions. Numerous approaches to prioritizing

Business Scorecards 80-20 Principle Cost-Benefit analysis (CBA) Net Present Value (NPV)

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AXA Financial

Case example of tactical view of making IT investments French global financial services organization with

140,000 employees and managing $795 billion in assets.

New governance methodology (beyond IT) Economics-informed investments (precludes

emotional attachment or other non-financial factors) Modeled after fund management Governance committee involve all C-level executives

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Investing: Shaping the IT Portfolio cont’d Benefits from Discussions Categorizing projects for comparisons Address project risks Prioritize quarterly and apportion your budget

accordingly Consistency (team decision-making)

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Managing: Establishing Credibility and Fostering Change

CIOs must first establish credibility in IS before change can come about.

Establishing Credibility Focus first and foremost on the “today” even

before talking about the “tomorrow” Deliver value-added, quality services First impression matters

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Fostering Change Technical aspects only half the battle Emphasis on change management

Changing the way people work, bringing it to the next level

Disruptive to current work practices Leads to resistance

Methodologies to implement IT-enabled change

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Working across organizational lines CIOs now find that systems they implement affect

people outside their firm boundaries Arms-length to more cordial relationship with partners

(suppliers and customers) Change need buy-in from these external

stakeholders

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REXAM

Case example of working across organizational lines One of the world’s top 5 consumer packaging

companies and the world’s top drink can maker Rethinking interactions with customers (B2B)

Leverage Internet to deliver “exceptional service” “Knock their socks off” Result: cash flow improvements, barriers to switching, profit

increase

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REXAM cont’d

CIO’s role External and business-oriented

Convincing existing customers and business development

Steering Committee’s role Firm-wide commitment from C-level executives for

expanded e-business initiatives envisioned by CIO. Online catalogue

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The Office of the CIO

Chief Information Officer (CIO) Top management, customers, suppliers

Chief Technology Officer (CTO) IT planning, architecture, new technologies

Chief Operations Officer (COO) Daily IS operations

Chief Project Officer (CPO) Projects management

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Conclusion: Recap

Why does the IS organization exist? Constant factor in parallel process of

technological changes and IS evolution What is the role of the IS organization?

Changing across the timeline toward IS Lite CIO’s job

How does the IS organization perform its job Strategies

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Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

© 2009 pearson education, inc. publishing as prentice hall the top is job chapter 2 information...

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