Transcript Document 7520526

The Top IS Job
Simon Fraser University
CMPT 301, Week 2, Fall 2007
Wang, Can; Email: [email protected]
http://www.cs.sfu.ca/CC/301/cwa50/
Outline
1
The Evolution of IS Organization
2 The CIO's Responsibilities
The Management of IT Organization



Early days: manage the technology
Then: manage the information resources
Now: IT is pervasive and is a mandatory link
between enterprises



Affecting every aspect of organizational
performance
Leading to the formation of "business ecosystem“
IT and IS
Waves of Innovation (1)
Wave 3: Enhancing Products & Services
Began
in
the '80s costs
Wave
1:
Reducing
Wave
5: in
Reaching
the Consumer
Attention
shifted
to using
IT to produce revenue by gaining
Began
the ’60s
Began
in on
theincreasing
'90sor creating
Focused
the productivity
of individuals
strategic
advantage
entirely new businesses
and business
areas by e.g.directly
automating
manual
Uses
IT to communicate
with consumers
processes
New4:marketing,
and service
strategies
Wave
Enhancingdistribution
Executive Decision
Making
Changes
thelate
rules
of competition
Began
in the
'80s
Wave 2: Leveraging Investments
Changed
structure of organizations
Began in fundamental
the ’70s
Created
real-time
management
Concentrated
on business
more
use
of systems
corporate
Management
must
be effective
involved
in guiding
IT use
assets
once
you
"cross
theimplemented
line"
Systems
ROI, cash flow
Wave
3 & 4 justified
must be on
onceetc.
an industry
leader has set a precedent
Source: Kenneth Primozic, Edward Primozic, and Joe Leben, Strategic Choices: supremacy, Survival, or
Sayonara (New York: McGraw-Hill, 1991)
Case Example: The SABRE System (1)

Waves 1 and 2


Wave 3


SABRE built to reduce costs of making airline seat
reservations
System expanded so it could be used directly by
travel agents
Wave 4

System expanded to include hotels and rental
cars through alliances with these suppliers
The SABRE System (2)

Wave 5



Reaching the consumer:
EAASY SABRE enabled direct consumer access
from their PCs
AAdvantage – frequent flyer program


Most profitable customers
Web sites
A Sixth Wave?

The Waves of Innovation was postulated in
1991.

What’s next?
Traditional Functions Are Being Nibbled
Away (1)

The traditional set of responsibilities for IS :





Managing operations of data centers, remote
systems, and networks
Managing corporate data
Performing systems analysis and design, and
constructing new systems
Systems planning
Identifying opportunities for new systems
Traditional Functions Are Being Nibbled
Away (2)
Distributed systems
Ever more
knowledgeable users
Better application
packages
Outsourcing
Will IS Organization Be Driven into
Oblivion?
?
New Roles Are Emerging (1)

IS is not a single monolithic organization, but rather a
cluster of four functions



Run operations
Develop systems
Develop architecture




Setting a strategy and maintaining an architecture for both IT and
information, providing a framework or standard for system operations
Identify business requirements
Each of these functions require a different set of skills and
a different management strategy
The business-oriented activities are more important to the
enterprise
George Cox
New Roles Are Emerging (2)
Source: George Cox, Time to Reshape the IS Department? (Wentworth Research Program, 1991)
New Roles Are Emerging (3)
---The Squeeze on Traditional IS Activities
New Roles Are Emerging (4)
---Will the IS Organization Be Squeezed into Oblivion?

The answer is negative, two roles will emerge
as dominant for IS function

Outsourcers have not sufficient management
involvement to understand and satisfy all
organization needs


IS becomes the broker between technical service
providers and business units
Enterprise IT Architecture (highly challenging,
must follow tightly business trends to stay
competitive)
New Roles Are Emerging (5)
---Roles for IS
Toward IS Lite (1)

IS started "centralized" and evolved into a
"federal model"


Some activities are handled centrally (standards,
operations etc.)
Others are dispersed to business units to meet
local needs (e.g. application development)
Roger Woolfe
Toward IS Lite (2)

IT activities take place in three IT macro-processes:

Driving innovation


Delivering change


Strategic planning, architecture design and business
requirements definition
System development and support of user changes
Supporting infrastructure

Desktop support, data center and network operations
Driving
Innovation
External
Service
Providers
Delivering
Change
Supporting
Infrastructure
Business
Units
Toward IS Lite (3)

Four major structural trends for IS Lite




Process-based working
Outsourcing
Specialist centers of excellence
Increasing IT activity embedded in business units.
Toward IS Lite (4)

After IS Lite



Driving innovation would be retained internally and mostly
centralized for coherence and exploitation across the
enterprise.
Delivering change would be mostly moved out to the
business units to get the benefits of being close to
customers.
Supporting infrastructure would be selectively outsourced
under central control for cost and efficiency
Case Example: LifeScan


Johnson and Johnson subsidiary
New CIO = agenda to align the department
with the business



Stage 1: IM organizations' purpose is to keep the
business running
Stage 2: IM organizations work closely with
business units
Stage 3: IM organizations partner with business
units and have direct influence on business
strategy
Outline
1
The Evolution of IS Organization
2
The CIO's Responsibilities
The CIO’s Responsibilities (1)

The emphasis of the top IS job has changed


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Before mid 1980s: IT infrastructure
Late 1980s: addressing business issues, helping
formulate corporate policy by creating a vision of
IT
Early 1990s: IT as a catalyst for revamping the
way enterprises worked (CIO appeared)
Late 1990s: Revamping business operations using
IT continued with the Internet
The CIO’s Responsibilities (2)



Beginning of 2000s: The "technical member" of
top management, ensuring e-business
2004: Emphasis on justifying IT investments, IT
portfolio management
Today: the cost emphasis remains, outsourcing
continues to grow, CIOs are expected to do much
more with not much more money
Major IT Eras
CIO Roles in Three Eras (1)

The Mainframe Era



Predominated 1960s – early ’80s
Supporting role: DP, IS Manager, application delivery
Distributed Era


From the end of ’70s (PC, LANS and WANS)
Took on 4 more roles:




Organizational designer
Technology advisor
Technology architect
Informed buyer
CIO Roles in Three Eras (2)

The Web Era

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Arose from the emergence of the Internet, and
esp. the Web as a business tool
This era is still in its ‘infancy’ but add to the CIO’s
‘job’ the role of business visionary



The Internet is about fundamental business change, not
technology
New business models
Relationship between CEO and CIO vary
along a wide spectrum
Four Aspects of the CIO Role

Leading


Governing

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Establishing an IS Governance structure
Investing


Creating a vision by understanding the business
Shaping the IT portfolio
Managing

Establishing credibility and fostering change
Leading: Creating a Vision by Understanding
the Business

Seven approaches to understanding the
business and its environment:

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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
Concentrate on Lines of Business

IT needs to server individual lines of business rather
than the entire company

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Supporting current operations (alignment)
Using systems to influence future ways of working (impact)
Creating a Vision of the Future and Selling It

Technology now has more influence in business.


CIOs need to create a vision of the enterprise's future
and its use of IT and sell those ideas to others
In today's volatile environment, direction setting
and short-term exploration are more appropriate
than multiyear plans.

Most corporate vision today has an IT underpinning
IT Governance

IT Governance

The assignment of decision rights and the
accountability framework to encourage desirable
behavior in the use of IT


Governance is about deciding who makes decisions whereas
management is about making decisions once decision rights
have been assigned
Driving force for a better IS governance structure


Financial scandals
Large and diverse IT expenditure

Centralizing all IT decisions is not a solution
Six Governance Styles
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A business monarchy is where C-level executives (CEO,
CIO..) hold the right to make decisions
IT monarchy: IT executives hold the right to make
decisions
Feudal is where business unit leaders (or delegates) have
decision or input rights
Federal means that the rights are shared by C-level
executives and one other tier of the business hierarchy
A duopoly is where one IT group and one business group
share a right
Anarchy is where individual process owners or end users
hold a right
Five Decision Areas

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IT principles are high-level statements about
how IT will be used to create business value
IT infrastructure strategies state the approach
for building shared and standard IT services
across the enterprise
IT architecture states the technical choices that
will meet business needs
Business application needs is where the
business defines its application needs
IT investment and prioritization defines the
process for moving IT-based investments
through justification, approval and accountability
IT Governance Arrangements Matrix
Investing: Shaping the IT Portfolio

IT investments has gained increased attention


Two key IT investment topics



CIOs were usually falsely blamed for making poor IT
investment
What to invest in (strategic)
How to make investment decision (tactical)
IT portfolio management

Systematic management of large classes of planned
IT initiatives, projects, and ongoing IT services etc.
A Strategic View of Making IT Investments (1)

Intense competition in "non-regulated" industries
forced executives to innovate by investing in IT,
improving their business processes and offering
new products and services

These innovations, in turn, increased productivity, thus
forming a virtuous circle
Fierce Industry
Competition
Increased
Industry
Productivity
Innovation in IT,
Products, and
Management Practices
A Strategic View of Making IT Investments (2)

IT investments best contribute to productivity
increase if

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Investing in main levers of productivity
Getting the investment sequence and timing right
Pairing new systems with new processes and
work practices that take advantage of the new IT
capabilities
Targeting IT Investments

Concentrate IT spending on "levers that
matter"


Either increase output or decrease input
"Levers that matter" differ among industry

E.g. Data warehouse for Wal-Mart
Sequencing and Timing IT Investments
---Case Examples: Wal-Mart Vs. Kmart

Wal-Mart

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(1) Automating the flow of products in its internal
supply chain (2) Turning outward to suppliers
coordinating its own operations with theirs (3)
Turning to customers to better plan its merchandising
mix and replenishment (4) Data warehouse
Kmart

Used IT to target its marketing promotions

Result: increase in demand from successful promotions could
not be met due to problems getting products into stores
Complementing IT Investments

Accompanying management practices must
also be changed to unlock the potential of IT
investments
A Tactical View of Making IT Investments


Most companies have far more opportunities
than they can fund
Must find a way to prioritize the possibilities
to best support their business' strategic
objectives


Prioritization
Maximize the business value of their IT
investments
Establishing Credibility and Fostering Change



CIOs are in the change business
But before a CIO and the IS organization will
be heard as a voice for change, the must be
viewed as being successful and reliable
To foster change, a CIO must establish and
then maintain the credibility of the IS
organization
Establishing Credibility

The key to credibility is to manage "today"
operation well

Computer operations
Technical support (including networks)
The help desk
Maintenance and enhancement of existing
systems
Delivery oriented with a high level of service

Outsourcing IT support functions




Working across Organizational Lines

CIOs now find that systems they implement
affect people outside their firm


Supply side: fewer suppliers but deeper
relationships
Customer side: need to get credibility from
customer executives to build and use interbusiness systems
The Office of the CIO

The work of the CIO has become so broad and
complex that it should be handled by a team

Chief Information Officer (CIO)


Chief Technology Officer (CTO)


Heads IT planning, which involves architecture and
exploration of new technologies
Chief Operations Officer (COO)


Heads IS and works with top management, customers and
suppliers
Heads day-to-day IS operations
Chief Project Officer (CPO)

Oversees all projects and project managers
Whither CIOs?

Different periods of recent history have seen
executives with different backgrounds
“running the show”


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Manufacturing = in the early 1900s
Sales and Marketing – 30s to 50s
Finance – 70s to 90s


Problems and scandals
Future – perhaps now CIOs have the most
appropriate backgrounds to run companies