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Management of Information Systems and Technology (MIST)

Rahul De'Hewlett-Packard Chair Professor

MIS Decisions for Managers

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Class Objectives

● Types of IT – different ways in which systems are viewed

● Decisions about IT – what decisions have to be made by CEOs about IT

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Low to High Need for New Information Technology

Factory Mode

Support Mode

Strategic Mode

Turnaround Mode

If systems fail even briefly, there is loss of business

Even if system is interrupted for many hours, no loss of business

New systems promise majorprocess and servicetransformations

New systems will close gapwith competitors;IT is 50% of capital spendingIT is 15% of corporate expen

Source: IT and the Board of D, Nolan and McFarlan, 2005.

Types of Information Technology● Components of modern information technology infrastructure

in an organisation

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Effective Information Systems

● Companies that manage their IT investments effectively generate returns (as much as) 40% more than competitors

● Have you heard this before:– “What can I do, I don't understand IT. Our IT people

don't seem to understand my business problems.”

Source: Six IT Decisions Your IT People Should not Make, Ross and Weill,2002.

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Problems

● High-profile systems implementation failures● Senior management abdicate responsibility● Adopting systems poses a business not a technical

challenge

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Decision 1

● How much should we spend on IT?

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Decision 1● How much should we spend on IT?● Easy answer: what is the industry benchmark● Hard answer: what is the strategic role of IT● Example: UPS invested in a system that soon

outgrew its original purpose; provided rich dividends

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Decision 2

● Which business processes should receive IT money?

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Decision 2

● Which business processes should receive IT money?

● Problem: IT departments will try to complete every project and on time- revenue planning system, accounting, CRM, all in same bag

● Internal or customer-facing● Prioritize and provide support for important

strategic systems

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Decision 3● Which IT capabilities need to be centralized?

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Decision 3● Which IT capabilities need to be centralized?● Old answers:

– Centralize: lower costs but less flexibility for units– Decentralize: costly but less business synergies

● Look for right balance – centralize core data; enable localized capabilities

● ERP and Cloud – tend to centralize; can enable local flexibility

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Decision 4

● How goodgood do our IT services really need to be?

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Decision 4

● How good do our IT services really need to be?● Mission critical applications (Factory mode IT):

high downtime penalty● Level of service required: decision about

performance, capacity, uptime

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Service Levels

Service LevelPercentage of Uptime

Downtime per day

Downtime per month

Downtime per year

99 % 14.4 mins 432 mins (7.2 hrs) 87.6 hrs (3.65 days)

99.9 % 1.44 mins 43.2 mins 525.6 mins (8.76 hrs)

99.99 % 8.6 seconds 4.32 mins 52.56 mins

99.999 % 0.86 seconds 26 seconds 5.26 mins 

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Decision 5

● How fast and flexible do you want your information, really?

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Decision 5

Source: “How fast and flexible do you want your information, really?” Davenport and Snabe, SMR, 2011.

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Decision 5

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Decision 6

● What security and privacy risks will we accept?

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Decision 6

● What security and privacy risks will we accept?● Higher security entails greater inconvenience● Consumer and employee privacy protection

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Decision 7

● Whom do we blame if an IT initiative fails?

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Decision 7

● Whom do we blame if an IT initiative fails?● Business executives have to make relevant

changes to extract business value from systems● (IT departments responsible for delivery and

performance)

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Decision 8

● What functions should be on the Cloud?

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Decision 8

● What functions should be on the Cloud?● Commodity functions, with low security risk,

which have a potential to scale● Core, strategic functions: for quick time-to-market

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Decision 9

● Where should Open Source products be used?

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Decision 9

● Where should Open Source products be used?● Limitations of proprietary technologies: higher

costs, lock-in, lawsuits● Open source challenges: vast array of choices

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Nine Decisions● How much to spend?● Which business processes?● Which IT capabilities should be centralized ?● How much performance?● How fast and flexible?● How much security and privacy?● Whom to blame?● What services on the Cloud?● Where should Open Source be used?