Transcript Managing Information, People and IT to Improve Business

Information Strategy as a Key Success
Factor for Enterprises and Universities
Presented by Dr. Donald A. Marchand
Professor, Strategy & Information Management, IMD,
Lausanne, Switzerland, and,
Chairman & President, enterpriseIQ
Ecublens, Switzerland
Bielefeld-040109
The Elusive Value of IT
“The Information Technology (IT) Paradox”
2.16
2001
2.17
2002
2.28
2003
2.40
2004
2.53
2005
2.67
2006
2.78
2007
Worldwide IT Spending
(In Trillions of Dollars)
Source: Gartner Dataquest June 2003
2
Copyright © 2003 All Rights Reserved
Bielefeld-040109
The Link of IT Spending to Company
Performance
Information
Technology
Investments
X
Business
Performance
(Profitability)
√
Increased
Company
Output
Capital
Flows
√
Falling Market
Prices
(Competition)
{
{
Competitive
Advantage
Competitive
Necessity
IT
Innovation
Customer
Benefit
The IT
Industry
Source: Hitt and Brynjolfsson, 1996
3
Copyright © 2003 All Rights Reserved
Bielefeld-040109
To Impact Business Performance,
Managers Typically Look at IT as a Visible
(Hard) Factor That They Can Invest in
and Influence
IT Practices
4
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Soft Factors are not Captured and Factored
into these Measurement Approaches
Information
Orientation (IO)
{
• Difficult to See
Information’s Value
• Difficult to Measure
Employees’ Behaviors
and Values
Information Information
Behaviors
Management
and Values
Practices
5
Information
Technology
Practices
• Difficult to Manage
Better Knowledge
Management and Use
Copyright © 2003 All Rights Reserved
Bielefeld-040109
The Cemex Way: The IT Legend
“Cemex in a league with Dell and Cisco as one of the
world's leading digital re-inventors.” (Business Week)
CEO Zambrano can check sales
“In Latin America,
figures or kiln temperatures in
Cemex uses time
any plant in the world from a
division multiplexer
communications center in
satellite
Monterrey that looks like a set
networks.”
from a science fiction movie
(ComputerWorld)
(Forbes) or NASA’s control
room in Houston (The
Economist).
In each case, "post-merger integration teams" ie, executives armed
with laptops, were dispatched to analyse the new acquisition, to cut
costs, and to harmonise its technical systems and management
methods with CEMEX's.
“Cemex's ready-mix
In our fifth e-strategy
delivery trucks
brief, we look at a
are equipped with
rarity: a company in
dashboard
the industrializing
computers that
world that has used
allow tracking by
e-business to steal
global positioning
a march on its richsatellite (GPS)
world rivals (Wired)
technology.”
Cemex – Global Growth Through
Superior Information Capabilities
1
2
3
Globalization:
Latin
Emerging
Markets
Refocus in the Core
Business-Cement:
Becoming a Domestic
Leader
Domestic
Conglomerate
Global
Growth
Building IT Infrastructure
- built satellite
telecommunications system
& other IT infrastructure
- trained people how to use it
Focusing on People & Processes
- developed post acquisition expertise
- hired "people oriented" IT managers
- conducted training
on human philosophy by Fernando Flores
- implemented business process
re-engineering program
- built an entrepreneurial mood
Building
Information
Capabilities
x
1906
Company
was formed
7
x
1984
x
1985
L.
Started
selling Zambrano
non-core became
businesses CEO
x
1987
Iniguez
joined
Cemex
x
1992
Acquired
Spanish
operations
x
1993
Cemtec
was
formed
x
1995
x
1997
Launched Entered Asia DSO acquired a company
in Philippines
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Cemex – Global Growth Through
Superior Information Capabilities
5
4
Growth in
Developed
Markets
& Embarking
on E-Ventures
Expansion into
Non-Latin Emerging
Markets
Global
Growth
Building
Information
Capabilities
x
1997
Entered Asia acquired a company
in Philippines
8
E-Business:
1. Intranet
Internet
Extranet
x
1999
Listed
in
NYSE
E-Business:
2. CxNetworks
a. dot.com
- Construmix
- Latinexus
- Construplaza
b.e-business consulting
- Neoris
x
2000
Acquired
Southdown;
CxNetworks
formed
x
2001
The Cemex Way: Information, IT & People
- standardizing information system & process
- e-enabling work force & supply/demand chain
- creating information-culture among & providing
training to employees, customers, suppliers &
alliance partners, e.g. e-selling, e-procurement &
e-workforce initiatives
E-Business:
3. distribution logistics (CoSite)
& expansion in the construction industry (Arkio)
Time
& Milestones
Copyright © 2003 All Rights Reserved
Bielefeld-040109
The Cemex Way: The Facts
“Contrary to what you read in the popular press,
our success was not based on developing a good
IT system. The press likes to focus on IT and our
outcomes, but not about what we have been able
to accomplish with our people. What we did was
create a new culture at Cemex, one that was
based on commitments, and action.”
Gelacio Iniguez, former CIO, Cemex, current CTO of CxNetworks
9
Copyright © 2003 All Rights Reserved
Bielefeld-040109
What is the Relationship Between the
Deployment and Usage of IT and
Information in your Organization?
Deployment ? Usage
= Business Value ?
Deployment - Usage
= Dilutes Value
Deployment + Usage
= OK
Deployment x Usage
= Multiplier Effect
Deployment of
I/T inside and
outside the
organization
10
Usage of I/T
by managers,
employees,
suppliers,
customers, and
partners
Return
for Driving
Business
Performance
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Breakthrough: Scientific measure of the
interaction of people, information and
technology and its proven link to business
performance
Information
Orientation
Business
Performance
{
• Market Share Growth
• Financial Performance
• Level of Innovation
• Superior Company
Reputation
Information Information
Behaviors
Management
and Values
Practices
11
Information
Technology
Practices
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Four Years of Leading Edge
Innovative Research
• Conducted at Europe’s leading Business School -- IMD in
Lausanne, Switzerland
– Over 100 global companies including:
– More than 1200 senior managers
– Across 26 industries
– Nearly 40 countries
• Leading international business publications
Oxford
12
M.I.T.
Wiley
Copyright © 2003 All Rights Reserved
Bielefeld-040109
New Performance Metric
Information Orientation
is the first,validated Measure
of Information Effectiveness
to Business Performance
People
Information
Technology
Proactiveness
Sensing
IT for Management Support
Sharing
Processing
Transparency
IT for Innovation Support
Maintaining
Control
IT for Business Process Support
Organizing
IT for Operational Support
Information Behaviors
and Values (IBV)
Formality
Integrity
13
Information Management
Practices (IMP)
Information Technology
Practices (IMP)
Collecting
Copyright © 2003 All Rights Reserved
Bielefeld-040109
IO Maturity
The Maturity Framework: Management
Prescriptions for Information and
Knowledge Use
14
Information
Behaviors
And Values
Information
Management
Practices
Information
Technology
Practices
Proactiveness
Sensing
Sharing
Processing
IT for Management
Support
Transparency
Control
Maintaining
Formality
Organizing
Integrity
Collecting
IT for Innovation
Support
IT for Business
Process Support
IT for Operational
Support
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Differences Between
High and Low Companies
BBVA
European Bank
15
Copyright © 2003 All Rights Reserved
Bielefeld-040109
The
Displays a Company’s
Strengths and Weaknesses
Hot!!!
Results
Capabilities IO total
Cold!!!
The
displays the
ranking of managers’ responses
to the IO DiagnosticTM relative to
the enterpriseIQ international
benchmark.
This report provides a drill-down
analysis across 24 critical
management areas that affect a
company’s performance.
16
Copyright © 2003 All Rights Reserved
Bielefeld-040109
A Large Northern European Retail Bank:
Low , Low Business Performance
17
•
The majority of IT resources and personnel were committed to converting
the IT operational and transaction systems of the bank with that of a merged
bank. After five years, only 80% of the two systems had been merged.
•
Two additional restructuring programs, the transition to the Euro, and Y2K
during the late 1990s continued to focus the IT department’s attention
almost exclusively on infrastructure and operational issues.
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Low
, Low Business Performance
• Customer channels fragmented
• Cross-selling in the branches failed
• Relationship managers relied on personal
systems
• Product managers had inadequate decisionmaking tools and complained of overload
• Senior managers blamed "IT problems" for
under performance
18
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Contrasting levels of information
Practices produce different IO and
Business Performance results
Bank A
A Large Southern European Bank
High IO, High Business Performance
Top 5%
19
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Banco Bilbao Vizcaya Argentaria (BBVA):
Executing Growth Strategies with Dynamic
Information Capabilities
Company transformation
Set-back
• New banking model: branches
to focus on selling to
customers, not performing
transactions
• Increases the effective use of
customer information
No clear strategy: internal
political struggle; lack of
leadership
Business
Strategies
Expansion into Latin America
• Develops an acquisition policy
• Invests US$ 4 billion in Latin
America
• IBV: Promotes transparent
company culture & encourages
employees to share information in
& across branches
• ITP: Develops a single IT
infrastructure to integrate all
channels
• IMP: Sets up information
management tools and processes;
& trains employees on how to
collect, maintain and use
information
Building
Dynamic
Information
Capabilities
to Achieve
High IO
• ITP: Builds a single IT
infrastructure in Latin America
• IMP: Changes partners’
systems & processes
• IBV: “Cross fertilization”
program to change
management’s mind-set
Developing High IO
x
1988
x
1989
x
1994
One coUriarte initiates executive
Banco de Bilbao
meeting to develop
& Banco Vizcaya chairman dies;
Ybarra
transformation plan &
merge
becomes sole
starts road shows to
chairman
rebuild morale & establish
sharing culture
x
1995
1st 1000Day
Program
launched
x
1997
2nd 1000Day
Program
launched
x
Oct. 19,
1999
BBV &
Argentaria
merge
Time &
Milestones
Banco Bilbao Vizcaya Argentaria (BBVA):
Executing Growth Strategies with Dynamic
Information Capabilities
Creating an International Brand
• Integrates 2 banks
• Acquires more operations
• Transfers banking model to partners to create a
global BBVA brand & to leverage its technology,
people, knowledge, and large customer base
Business
Strategies
• Integrates systems & processes of the 2 banks’ global
operations and other newly acquired operations, and creates an
acquisition & merger capability
• Integrates e-technologies into its business model:
• Launches e-sell, e-make , e-buy & IT architecture
initiatives
• Develops E-banking, e-Commerce & e-Ventures
initiatives, e.g. BBVAnet
• Launches initiatives with Telefonia: Uno-e.com, CRM,
BBVA Ticket, Adquira.com, FoodService & Katalix
Building
Dynamic
Information
Capabilities
to Achieve
High IO
Time &
Milestones
x
Oct. 19,
1999
BBV &
Argentaria
merge
x
Jan. 1,
2000
Merger
project
starts
x
Feb. 2000
3rd 1000-Day
Program
launched CRE@; alliance
with Telefonica
x
June
2000
Acquires
Bancomer
x
Jan. 2001
Merger project complete; buys out 2 banks in
Argentina & Colombia; drops some Telefonia
projects; launches new Telefonia initiatives
Characteristics of Organizations with Low
and High IO - Examples
Low IO
High IO
• People do not know enough
about their customers to
adequately serve and anticipate
their needs
• Information is easily accessed
across organizational
boundaries and hierarchies
• Efforts to serve customers have
failed due to a lack of
information and sharing across
channels
• There is no clear payback from
ever increasing IT investments
• Many decisions are made on
gut-feel rather than the facts
22
• Managing Information –
collecting, organizing,
maintaining – is viewed as
everyone’s responsibility
• Information Technology is
viewed as integral to the
organization’s business – not
simply as a support function
• Managers have a keen sense of
urgency about what they don’t
know
Copyright © 2003 All Rights Reserved
Bielefeld-040109
IO enables an Organization’s strategy
Leadership Challenges
•
•
•
•
•
Customer-Driven
People-Centric
Team-Focused
Entrepreneurial
Results-Oriented
Vision:
Global Leader
Through:
• Customer Focus
• Differentiation
• Strengthening Core
Activities
• Leveraging IT
Effective Use of Information
& Knowledge
Leveraging What We Know
Behaviors
Information
Technology
Management
Sharing
Sensing
Processing
Transparency
Maintaining
Control
Organizing
Formality
Collecting
Business
Process
Operations
Proactiveness
Integrity
HIGHER
Innovation
Superior
Organizational
Services and
Products
Many organizations have developed performance scorecards, but until the
IO Maturity Framework and Metric were developed, they had no effective
way of seeing, measuring and managing their information capabilities.
Example – Company Performance Scorecard
Financial
What we must
deliver to our
shareholders
Client
What our clients
expect from us
Increase shareholder value
Missing Performance
Measure!
Information Orientation
How we must develop our
information capabilities
24
Maintain top
financial strength
Maximize sales
Long-term supplier for
high quality products
Client Focus
Internal
What processes we
must excel at
Improve expense
productivity
Grow revenue
Maximize business
opportunities
Build consistent and
deeper client relationships
Maximize
investment return
Maximum Client Value
The right product mix
Delivery Focus
Understand
client needs
Package and ship
products efficiently
Manage our
inventory
Expand and leverage
leadership in logistics
intelligence
High quality and
certified manufacturing
Operational
Excellence
Streamline and
improve business and
information processes
Enhance and comply with
quality management processes
Ensuring the effective usage of information within and across
functions
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Breakthrough: The Information
Orientation of an organization is linked to
performance
Information
Orientation
People
Information
Technology
Proactiveness
Sensing
Management
Sharing
Processing
Innovation
Transparency
Maintaining
Control
Organizing
Business
Process
Operations
Formality
Integrity
25
Business
Performance
Collecting
{
• Market Share Growth
• Financial Performance
• Level of Innovation
• Superior Company
Reputation
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Information Orientation (IO) measures
the effectiveness of information and IT
usage by the organization’s people which
impacts performance
New Business
Formula
D
x U
Deployment
of I/T
x
Effective
=
Usage of I/T
by our people
Information
Orientation
(IO)
26
= BV
=
ExpectedBusiness Value
Performance
Copyright © 2003 All Rights Reserved
Bielefeld-040109
How Managers Can Extract the Full
Organizational Value from Information and
Technology (I/T) –The Multiplier Effect
New Business
Formula
D
x U
Deployment
of I/T
27
x
= BV
Effective
=
Usage of I/T
by our people
Impact onBusiness Value
Competitive
Necessity
Competitive
Advantage
Technology
Strategy
Information
Strategy
Technology
Orientation
Information
Orientation
Cost Savings for
Efficiency
Creating Value
for Effectiveness
Copyright © 2003 All Rights Reserved
Bielefeld-040109
Lessons Learned About Managing
Information, People and IT to Improve
Organizational Performance
• The mindset and actions of an organization’s managers are
critical to effective information use and to achieving
performance results with information, people and IT
capabilities –only managers can drive information strategy!
• Building an organization’s Information Capabilities is as
much about people behaviors and information practices as it
is about IT –managers’mindsets and actions influence
information behaviors and values!
• Leveraging information and knowledge for performance
impact is no longer « soft » or « intangible »: We can see,
measure and leverage these assets by managing the
Information Orientation of our organization.
28
Copyright © 2003 All Rights Reserved
Bielefeld-040109