Transcript No Slide Title

Introduction
Evolutions
Business executives viewed the ICT function as the
province of the technocrats primarily interested in new
features with little relevance to real-world business
problems;
Technology executives have often considered business
managers to be shortsighted, lacking vision to exploit all
that technology has to offer.

Struggle as they attempt to implement increasingly
complex systems in the face of rapid change in
business and technology
Evolution
During the 20th century
Social and Business Evolution
Agricultural
Economy
Information
Economy
Industrial
Economy
1950
1900
2000
Typical mathematical formula:
D=B 2 -4AC
Equivalent FORTRAN statement:
D=B ** 2-4*A*C
Telegraph
Technology Evolution
Photos reprinted with permission from
AT&T and IBM
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , Corporate Information Strategy and Management . Burr Ridge, IL:
McGraw -Hill/Irwin, 2002.
Chapter 1 Figure 1 - 2
Evolution of Computing
Performance
Price Performance Trends of Mainframes and PCs
$/MIPs
1,000,000
8:1*
100.000
Mainframe
10,000
286:1*
1,000
PCs and workstations
900:1*
100
10
1
1980
*Ratio of MIPs per Dollars (Mainframes:PCs)
1990
1996
Adapted from: McKenney, J., Waves of Change: Business Evolution
through Information Technology , Boston: Harvard Business School
Press, 1995.
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan ., Corporate Information Strategy and Management . Burr Ridge, IL:
McGraw -Hill/Irwin, 2002.
Introduction Figure I -1
Examples
American airlines
Baxter
Mrs. Field Coockies
Open Market
Facts
Business executives have begun to wrest
control from IT executives who have failed to
step up to the challenge of entering the
boardroom
We see IT-enabled “virtual organizations” in
which many small independent agents (or firms)
band together as nodes on an information
network to achieve dramatic increases in scope
and scale.
Independency of time and physical location.
21st Century insights: Themes
Expanded processing capacity enables convergence of voice, video
and data; encourages real-time transactions and interactivity;
dramatically increases connectivity and access.
The business models that dominated the industrial economy are
evolving to take advantage of of the capabilities of new technologies.
ICT infrastructure becomes more standardized, modular and scalable

From cost avoidance to asset-based, strategic approach
Organizations “buy” rather than “make” IT-applications
Cooperation amongst 4 constituencies

Business executives, IT-executives, users, technology providers
Need to ensure high levels of security, privacy, reliability, and
availability.
Theme 1:
Market structure and industry
dynamics
Porters value chain model
Support activities
Administration and infrastructure
Human resource management
Product/technology/development
Procurement
Inbound Operations Outbound
logistics
logistics
Sales and
marketing
Services
Value
added cost =
MARGIN
Primary activities
Well defined roles, responsibilities and relationships were
governed by standardized policies, procedures and agreements
The Value Chain Defines Industry
Structure and Relationships
Evolution towards virtually integrated industries
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren
McFarlan Corporate Information Strategy and Management . Burr Ridge, IL:
.,
Introduction Figure I
McGraw -Hill/Irwin, 2002.
-2
Theme 2: Evolving Business Models
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , Corporate Information Strategy and Management . Burr Ridge, IL:
McGraw -Hill/Irwin, 2002.
Chapter 2 Figure 2 -1
What business are you in?  What is you business model?
Who are our customers? Our suppliers?
ASP models
Theme 3:
The Impact of IT on Strategy and
Operations
Reliable zero defect operations
Steady stream of technological innovations
High
IT Impact on Core Operations
Factory
Strategic
Goal: Improve performance of
core processes
Goal: Transform organization or
industry
Leadership: Business unit executives
Leadership: Senior executives & board
Project Management: Process
reengineering
Project Management: Change
management
Support
Turnaround
Goal: Improve local performance
Leadership: Local level oversight
Leadership: Venture incubation unit
Project Management
No strategic impact from IT
Low
Goal: Identify and launch new
ventures
Project Management: New venture
development
IT Impact on Core Strategy
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , Corporate Information Strategy and Management . Burr Ridge, IL:
McGraw -Hill/Irwin, 2002.
High
Chapter 1 Figure 1 -6
Theme 4:
Prioritizing IT investments
Benefits from investments in Networked IT
Infrastructure

Functionality and flexibility
Benefits from doing business on a Networked IT
Infrastructure



Commerce: operating efficiency, process performance
Content/knowledge
community
Theme 5:
Assimilation and Organizational Learning
Phase 1
Opportunity Identification
and investment
Lack of
Attention
And
commitment
stagnation
block A
Success
Phase 2
Organizational learning
Success
and adaptation
narrowly
focused and
not marketed
stagnation
block B
Phase 3
rationalization and
Continuous evolution
too efficiency
dominated
stagnation
block C
Success
Phase 4
widespread
technology transfer
Theme 6:
Buy versus Make
User friendly personal software packages
Can I outsource data centers, networks, help
desks, PC support
Allignment of short term and long term goals and
incentives
Provisions for death and divorce
Theme 7: Partnership among
Constituancies
Three Eras of IT evolution
Administrative
framework
Era I
Mainframe
Era II Microcomputer
Era III
Internetwork
Regulated
monopoly
Free
Market
Shared
Partnership
Target for
IT use
Justification/
Benefits
Back office
Automation
Organizational
Productivity
Individual
Electronic integraTion and Learning
Individual/Group
Effectiveness
Business
Advantage
Five Questions to the
Manager
to be answered every six months or so.
1.
Do the perspectives and skills of the IT and general management team fit the firm’s
changing applications trust, operations challenges, user environment, and often shift in
strategic relevance ?
2.
Is the firm organized to identify , evaluate , and assimilate new IT-opportunities? In this fast
moving field an internally focused, low-quality staff can generate severe problems.
Unprofitable, unwitting obsolescence (from which it is hard to recover) is terribly easy here.
There is no need for a firm to adopt leading-edge technology (indeed, many are ill equipped
to do so), but it is inexcusable not to be aware of what the possibilities are.
3.
Are the three main management systems for integrating the environment to the firm as a
whole in place and implemented? These are the strategic planning system, the
management control system and the project management system.
4.
Are the security , priority setting, manufacturing procedure , and change control systems in
the IT operations function appropriate for the role it now plays in the firm?
5.
Are organization structures and linking mechanisms in place that will ensure informed senior
management on IT-evolutions such that IT is aligned with the needs of the company?
Investing in ICT
If you think
good information systems are expensive,
try without them !
Company
company not the same anymore
 information
 quality
system became strategic
requirements finally stated
 management
 Global
at all levels involved
knowledge management
IT - departments
Not the same anymore

much larger action radius

role of the central system has changed


hardware within the budget of a
department
required knowledge not pure technical
anymore
User
Not the same anymore either

not doing his first IT-project

got some computer training
has his own preferred packages
wants to build his own little system

doesn’t want to be forced into a system

wants to be involved in the development
Nolan evolution of IT-usage
Four stages of DP growth:
maturity
control
contagion
initiation
NOLAN phases
Stage
orientation
organization
Initiation
contagion
control
cost reductionnew functions moratorium
where first useddispersed
manager
operations
manager
management viewlax
central
maturity
database inquiry
controlled distributed
middle managermiddle managerdirector
selling
controlling
a resource
applications
supporting
diversification databases
end-user computing
control
little
very little
strong
normal
PC's
project groups transparent
user involvementinterviews ,
manuals
Success of 21st Century Company
Depends on:
Immediate availability of the right information on the right
moment in time

Continuous scan of environment
Learning company

Knowledge base
Immediate reaction

Zero Latency Company
Flexible organizational structure of independent cells
virtual company
Corporate Information Manager
Goals and Technologies
Enabling Technologies
Workflow Inter(tra)net
WEB
Data Mining
Secure Payments
Data Warehousing
Databases, ERP
Telecom, broadband
Development
environments
Goals and Requirements
Information as a
resource
Zero Latency
E-commerce
Flexibility
Efficiency
Knowledge Management
Partnerships
XML
Diversity
System management
Added Value
Citation
There is nothing more difficult to plan ,
more doubtful of success,
nor more dangerous to manage
than the creation of a new system.
For the initiator has the enmity of all who
would profit by the preservation of the old
system and merely lukewarm defenders in
those who would gain by the new one.
Machiavelli, 1513