Chapter 1Chapter 1

Managing in the Information AgeManaging in the Information Age

IntroductionIntroduction

The information revolution has been underway for close to five decades

Important information, broadly disseminated, radically alters the balance of power among individuals, institutions, and governments

To succeed in this rapidly changing environment, managers must remain fluent in new practices and techniques

The information revolution has been underway for close to five decades

Important information, broadly disseminated, radically alters the balance of power among individuals, institutions, and governments

To succeed in this rapidly changing environment, managers must remain fluent in new practices and techniques

How Organizations Use Information

How Organizations Use Information

Organizational Resources Money Skilled Employees Information Physical Property Time

The task of managers is to use these resources in an optimal way to fulfill an organization’s mission, that is, resource management

Organizational Resources Money Skilled Employees Information Physical Property Time

The task of managers is to use these resources in an optimal way to fulfill an organization’s mission, that is, resource management

Information and PeopleInformation and People

In the information-intensive environment, the creative combination of people and information can be a powerful force in achieving superior performance

Skilled people coupled with advanced information technology has revolutionized commerce and altered the concept of management

In the information-intensive environment, the creative combination of people and information can be a powerful force in achieving superior performance

Skilled people coupled with advanced information technology has revolutionized commerce and altered the concept of management

IT Impacts on BusinessIT Impacts on Business

Advanced technology redistributes knowledge among all employees and undermines traditional authority that is based on privileged access to information

Rapid, constant, and deep access to institutional knowledge will radically transform organizations, collapsing levels of management, and flattening organizational hierarchy

Advanced technology redistributes knowledge among all employees and undermines traditional authority that is based on privileged access to information

Rapid, constant, and deep access to institutional knowledge will radically transform organizations, collapsing levels of management, and flattening organizational hierarchy

Information Technology Organizations

Information Technology Organizations

On an organizational chart, IT is generally classed as a department like marketing or manufacturing

Operationally, IT operates as a business within a business, supporting all other units in different ways

On an organizational chart, IT is generally classed as a department like marketing or manufacturing

Operationally, IT operates as a business within a business, supporting all other units in different ways

Functions and IT SupportFunctions and IT SupportProduct DevelopmentManufacturingDistributionSalesServiceFinance and AccountingAdministration

Product DevelopmentManufacturingDistributionSalesServiceFinance and AccountingAdministration

Design AutomationMaterials LogisticsWarehouse AutomationOrder Entry, Sales

AnalysisParts LogisticsLedger, Planning, AP, AROffice Systems,

Personnel Records

Design AutomationMaterials LogisticsWarehouse AutomationOrder Entry, Sales

AnalysisParts LogisticsLedger, Planning, AP, AROffice Systems,

Personnel Records

Management TasksManagement Tasks

Line Responsibilities – directly related to accomplishing the responsibilities of the organization

Staff Responsibilities - support line functions in accomplishing their primary mission

Senior IT managers have a hybrid role, blending both staff and line missions

Line Responsibilities – directly related to accomplishing the responsibilities of the organization

Staff Responsibilities - support line functions in accomplishing their primary mission

Senior IT managers have a hybrid role, blending both staff and line missions

Managing Information Technology

Managing Information Technology

IT describes an organization’s computing and communications infrastructure

IT management includes the tasks of managing the infrastructure, standards, and operations; making technology-related investments; and recommending appropriate corporate policy

IT describes an organization’s computing and communications infrastructure

IT management includes the tasks of managing the infrastructure, standards, and operations; making technology-related investments; and recommending appropriate corporate policy

Evolution of IT Management

Evolution of IT Management

1950s to 1960s – automation of routine business data handling

1970s – connection of terminals to mainframes shifted focus from providing data to creating knowledge (Decision Support Systems)

1950s to 1960s – automation of routine business data handling

1970s – connection of terminals to mainframes shifted focus from providing data to creating knowledge (Decision Support Systems)

Evolution of IT Management

Evolution of IT Management

1980s – Widespread telecommunications and data networking moved computing from the mainframe to the desktop

1990s – Internet technologies and applications extended the boundaries of the enterprise. New business models took hold with e-business and ASPs

1980s – Widespread telecommunications and data networking moved computing from the mainframe to the desktop

1990s – Internet technologies and applications extended the boundaries of the enterprise. New business models took hold with e-business and ASPs

Types of Information Systems

Types of Information Systems

Transaction Processing Systems Management Information Systems Decision Support Systems Office Automation Systems Expert Systems

Transaction Processing Systems Management Information Systems Decision Support Systems Office Automation Systems Expert Systems

Internet-Based Business Systems

Internet-Based Business Systems

Prior to 1990, IT systems focused on supporting the value chains within an organization

With widespread Internet technology, value chain management could extend outside an organization becoming much more complex and responsive

Prior to 1990, IT systems focused on supporting the value chains within an organization

With widespread Internet technology, value chain management could extend outside an organization becoming much more complex and responsive

Enterprise Resource Planning

Enterprise Resource Planning

With digital value chain data, organizations Improve responsiveness to customer

needs Accomplish just-in-time inventory

management Increase operational efficiency Decrease internal costs Increase service and product quality

With digital value chain data, organizations Improve responsiveness to customer

needs Accomplish just-in-time inventory

management Increase operational efficiency Decrease internal costs Increase service and product quality

IT Management Challenges

IT Management Challenges

Organizations have high expectations for the benefit they will derive from technology and software purchases

Technology brings structural changes to the organization

Unmanaged expectations and ongoing change test the personnel management skills of IT managers

IT managers must be technological leaders and superb generalists

Organizations have high expectations for the benefit they will derive from technology and software purchases

Technology brings structural changes to the organization

Unmanaged expectations and ongoing change test the personnel management skills of IT managers

IT managers must be technological leaders and superb generalists

Controls and Environmental Factors

Controls and Environmental Factors

Knowledge based organizations must have rigorous control mechanisms in place

Loss of control in highly automated operations can give rise to rapid error propagation

Intra and extranets linking different organizations make effective control even more challenging

Knowledge based organizations must have rigorous control mechanisms in place

Loss of control in highly automated operations can give rise to rapid error propagation

Intra and extranets linking different organizations make effective control even more challenging

Competitive Considerations

Competitive Considerations

Firms expect Information Technology managers to deliver the tools necessary to capture and maintain competitive advantage

IT organizations are directly on their firm’s critical path to success

Ineffective IT management can hinder the performance of the entire organization

Firms expect Information Technology managers to deliver the tools necessary to capture and maintain competitive advantage

IT organizations are directly on their firm’s critical path to success

Ineffective IT management can hinder the performance of the entire organization

People and OrganizationsPeople and Organizations

Information Technology changes organizations

These changes are perceived by many as a threat to power, position, or influence

IT managers must develop good people management skills and be attuned to these issues

Information Technology changes organizations

These changes are perceived by many as a threat to power, position, or influence

IT managers must develop good people management skills and be attuned to these issues

IT Management IssuesIT Management Issues

Even though Information Technology is evolving at a phenomenal pace, critical issues facing IT managers have remained largely unchanged for years Aligning IT and corporate goals Re-engineering business processes Defining IT’s role and contribution Developing an information architecture

Even though Information Technology is evolving at a phenomenal pace, critical issues facing IT managers have remained largely unchanged for years Aligning IT and corporate goals Re-engineering business processes Defining IT’s role and contribution Developing an information architecture

IT Management IssuesIT Management Issues

Three newer issues have arisen as IT has entered the Internet age: Using IT to improve productivity,

quality, and effectiveness Creating or maintaining competitive

advantage through IT Redesigning business processes to

better support corporate strategy

Three newer issues have arisen as IT has entered the Internet age: Using IT to improve productivity,

quality, and effectiveness Creating or maintaining competitive

advantage through IT Redesigning business processes to

better support corporate strategy

Maturation of IT Management

Maturation of IT Management

IT has moved over the past 4 decades from supporting accounting to enabling fully integrated data based management systems

Managers have grown from technical experts to sophisticated generalists

IT has moved over the past 4 decades from supporting accounting to enabling fully integrated data based management systems

Managers have grown from technical experts to sophisticated generalists

Managing Mature IT Organizations

Managing Mature IT Organizations

Paul Strassmann has written extensively about mature models of IT management. Their elements include: Governance Business Plan Alignment Process Improvement Resource Optimization Operating Excellence

Paul Strassmann has written extensively about mature models of IT management. Their elements include: Governance Business Plan Alignment Process Improvement Resource Optimization Operating Excellence

Information Technology Assimilation

Information Technology Assimilation

Over the past several decades, IT has spread from isolated, single-dimensioned functions to sophisticated, multi-faceted and integrated systems

Shifts have occurred in application development, transitioning from largely in-house creations to more off the shelf products

Over the past several decades, IT has spread from isolated, single-dimensioned functions to sophisticated, multi-faceted and integrated systems

Shifts have occurred in application development, transitioning from largely in-house creations to more off the shelf products

Critical Success FactorsCritical Success Factors

Concept developed by John Rockart to help executives define their information needs Two types: monitoring type and building type

Defined four areas where executives need to search for critical success factors The industry their firm operates in The company itself The environment Time-dependent organizational areas

Concept developed by John Rockart to help executives define their information needs Two types: monitoring type and building type

Defined four areas where executives need to search for critical success factors The industry their firm operates in The company itself The environment Time-dependent organizational areas

Critical Success Factors for IT Managers

Critical Success Factors for IT Managers

Managers need to answer two questions: What conditions are necessary for IT

manager’s success today? What tasks must be carried out very

well in order for managers to succeed? The answers to these questions can

be grouped into four classes

Managers need to answer two questions: What conditions are necessary for IT

manager’s success today? What tasks must be carried out very

well in order for managers to succeed? The answers to these questions can

be grouped into four classes

Critical Areas for IT Managers

Critical Areas for IT Managers

1. Business Management Issues2. Strategic and Competitive Issues3. Planning and Implementation

Concerns4. Operational Items

1. Business Management Issues2. Strategic and Competitive Issues3. Planning and Implementation

Concerns4. Operational Items

Business Management Issues

Business Management Issues

Obtain agreement with the firm’s executives on how IT will be managed within the firm

Operate the IT function within the parent organization’s cultural norms

Attract and retain highly skilled people Practice good people-management skills Use IT to improve productivity and

financial returns

Obtain agreement with the firm’s executives on how IT will be managed within the firm

Operate the IT function within the parent organization’s cultural norms

Attract and retain highly skilled people Practice good people-management skills Use IT to improve productivity and

financial returns

Strategic and Competitive Issues

Strategic and Competitive Issues

Develop IT strategies supporting the firm’s strategic goals and objectives

Provide leadership in technology applications to attain competitive advantage for the firm

Educate the management team about the opportunities and challenges involved in technology introduction

Ensure realism in long term expectations

Develop IT strategies supporting the firm’s strategic goals and objectives

Provide leadership in technology applications to attain competitive advantage for the firm

Educate the management team about the opportunities and challenges involved in technology introduction

Ensure realism in long term expectations

Planning and Implementation Concerns

Planning and Implementation Concerns

Develop plans supporting the firm’s goals and objectives

Provide effective communication channels so that plans and variances are widely understood

Establish partnerships with client IT organizations during planning and implementation

Maintain realism within the organization regarding intermediate-term expectations

Develop plans supporting the firm’s goals and objectives

Provide effective communication channels so that plans and variances are widely understood

Establish partnerships with client IT organizations during planning and implementation

Maintain realism within the organization regarding intermediate-term expectations

Operational ItemsOperational Items

Provide customer service with high reliability and availability

Deliver service of all kinds on schedule and within planned costs

Respond to unusual customer demands and to emergencies

Maintain management processes that align operational expectations with IT capabilities

Provide customer service with high reliability and availability

Deliver service of all kinds on schedule and within planned costs

Respond to unusual customer demands and to emergencies

Maintain management processes that align operational expectations with IT capabilities

ExpectationsExpectations

IT managers should supply their firm’s executives with their technical and business input so that executives can anticipate and prepare for future structural changes well in advance

They must keep the firm’s financial and strategic goals firmly in mind and champion a realistic, practical, and innovative view of the future

IT managers should supply their firm’s executives with their technical and business input so that executives can anticipate and prepare for future structural changes well in advance

They must keep the firm’s financial and strategic goals firmly in mind and champion a realistic, practical, and innovative view of the future

ExpectationsExpectations

Expectations held by the firm’s senior executives constitute a yardstick by which its IT managers will ultimately be measured

Superior managers understand the importance of expectations and manage them effectively by being proactive

Unskilled managers over promise and raise expectations that they are ultimately unable to fulfill

Expectations held by the firm’s senior executives constitute a yardstick by which its IT managers will ultimately be measured

Superior managers understand the importance of expectations and manage them effectively by being proactive

Unskilled managers over promise and raise expectations that they are ultimately unable to fulfill

A Model for Studying IT Management

A Model for Studying IT Management

The study of information technology management concentrates on: Accomplishing business results Attaining efficiency and effectiveness Achieving and maintaining

competitiveness Each of these elements is essential

to the firm’s success

The study of information technology management concentrates on: Accomplishing business results Attaining efficiency and effectiveness Achieving and maintaining

competitiveness Each of these elements is essential

to the firm’s success

SummarySummary

IT is a powerful force in today’s global society

These technologies are enabling important transformations that profoundly affect people, organizations, industries, and nations

IT is a powerful force in today’s global society

These technologies are enabling important transformations that profoundly affect people, organizations, industries, and nations