Transcript Lecture 6.ppt

The Top IS Job
Lecture 6
2-1
Today lecture Summary





Traditional Functions Are Being Nibbled Away
Roles
Toward IS Lite
The CIO’s Responsibilities
Four Aspects of the CIO role
2-2
Traditional Functions Are Being
Nibbled Away
•
IT has become an essential piece of business strategy
•
Not keeping up in IT may even mean going out of
business
•
The job has become too large for one group
•
While the growing importance of IT is causing the IS
Department’s work to expand into new areas of
responsibility, management is realizing that the traditional
and more operational portions of the job do not have to be
performed by the IS department
– Particularly ‘centralized’
2-3
Traditional Functions Are Being
Nibbled Away cont.
•
The traditional set of responsibilities for IS has
included:
1. Managing operations of data centers, remote
systems, and networks
2. Managing corporate data
3. Performing systems analysis and design, and
constructing new systems
4. Systems planning
5. Identifying opportunities for new systems
2-4
Traditional Functions Are Being Nibbled
Away (Figure 2-2)
•
The traditional functions still need to be performed but
the following trends are moving their performance out of
the IS department and into other parts of the
organization or to other enterprises:
1. Distributed systems
–
Software applications migrating to user areas
2. Ever more knowledgeable users have taken on
increased IS responsibilities
2-5
Traditional Functions Are Being
Nibbled Away (Figure 2-2)
conti…
3. Better application packages
–
Less need for ‘armies’ of programmers,
analysts etc.
4. Outsourcing
2-6
2-7
New Roles are Emerging
•
(Another way to look at it:) IS is not a single monolithic
organization, but rather a cluster of four functions (Fig.
2-3):
1. Run operations
2. Develop systems
3. Develop architecture
4. Identify business requirements
2-8
New Roles are Emerging conti..
•
•
The ‘Squeeze’ on Traditional IS Activities (Figure 2-4):
–
Growing External Services
–
Growing Capabilities of Users
‘Future’ Roles for IS (Figure 2-5):
–
Broker
–
Systems and Information Architecture
2-9
2-10
2-11
2-12
Toward IS Lite
(another ‘view’)
• IS started ‘centralised’ and evolved into a ‘federal model’:
– Some things (standards, operations) = centralised
– Others (application development) = dispersed locally
to best meet local needs
•To make the federal model work better, companies are
shifting attention from roles to processes
2-13
Toward IS Lite
(another ‘view’)
•
The IS department can be viewed as
managing three overall processes (Figure
2-6):
–
Driving innovation
–
Managing change
–
Supporting infrastructure
2-14
2-15
LifeScan
Case example: The ‘Federal’ Model
•
Johnson and Johnson subsidiary
•
New CIO = agenda to align the department with the
business
•
Focussed on execution and measurement to gain
credibility with the business units
•
Strong project management and not allow scope
creep
– Emphasis on staff with these skills
2-16
LifeScan..
•
Uses Johnson and Johnson Group ‘stuff’ combined
with local (LifeScan) ‘culture’
•
Centralization of policies, procedures etc.
•
Local implementation with all projects business led
–
Moves ownership of systems to the business
people
2-17
The CIO’s Responsibilities

In line with the evolution of IS departments, the
emphasis of the top job has changed
 86 = Infrastructure
 89 = helping formulate corporate policy
 92 = IT as a catalyst for revamping the way
enterprises worked
 98 = revamp business operations using IT continued
with the Internet (customers +)
 02 = the ‘technical member’ of top management
 04 = a cost and risk based approach Vs. “let’s get
into e-commerce fast…”
2-18
The CIO’s Responsibilities


Today the cost emphasis remains
 Outsourcing continues to grow (amid controversy)
 CIOs are expected to do much more with not much
more $$
Also = under pressure:
 To implement protective measures
 New financial reporting e.g. Sarbanes Oxley
 Keep the IT innovations coming!!
2-19
CIO Responsibilities — History
2-20
CIO Responsibilities — History cont.

The Mainframe Era
 Predominated 1960s – early ’80s
 Role of DP / IS Manager = operational manager of a
specialist function

Distributed Era
 End of ’70s as PCs became commonplace
 LANS and WANS linking computers
 Took on 4 more roles:
 Organizational Designer
 Technology Advisor
 Technology Architect
 Informed Buyer
2-21
CIO Responsibilities — History cont.

The Web Era
 Started in the mid-1990s for some
 Arose from the emergence of the Internet, and esp.
the Web as a business tool
 Era is still in its ‘infancy’ but add to the CIO’s ‘job’
the role of business visionary

Relationship between CEO and CIO vary along a wide
spectrum
2-22
Four Aspects of the CIO role
1.
2.
3.
4.
Leading: Creating a vision by understanding the
business
Governing: Establishing an IS Governance
structure
Investing: Shaping the IT portfolio
Managing: Fostering change
2-23
1. Leading: Creating a Vision by Understanding
the Business

There are seven approaches CIOs are using to
understand the business and its environment:
1.
Encourage project teams to study the
marketplace
2.
Concentrate on lines of business
3.
Sponsor weekly briefings
2-24
1. Leading: Creating a Vision by
Understanding the Business…
4. Attend industry meetings with line executives
5. Read industry publications
6. Hold informal listening sessions
7. Become a “partner” with a line executive
2-25
1.A Understand the Business:
Encourage Project Teams to Study the
Marketplace
•
Gather the following information about the
company and its industry:
–
Current industry environment
–
Business goals and objectives
–
Major practices of competitors
–
Pertinent government regulations
–
The inputs, outputs, and resources of the firm
2-26
1.B Understand the Business:
Concentrate on Lines of Business
•
It is recommended to ask the following questions
about each line of business:
1.
Are we organized to serve that line of business?
2.
Do we have an account manager in IS who has
responsibility for that line of business?
3.
Do we have someone within that line of business who
oversees IT activity and talks the business language?
2-27
1.B Understand the Business:
Concentrate on Lines of Business
4. Do we have a sponsor in the line of business?
5.
Do we have the attention of their management?
6.
Does the line of business offer an opportunity to use
systems in new ways?
2-28
1.C Understand the Business:
Sponsor Weekly Briefings
•
To understand the business, one needs to
understand the marketplace
•
By sponsoring short presentations by the people
closest to a business, IS management can help
fix the problem of employees not being given
exposure to the marketplace without cutting into
working time too greatly
2-29
1.D Understand the Business:
Attend Industry Meetings with Line
Executives
• Attending meetings with a line executive can be
even more enlightening because he or she can
explain what the company is or is not doing in
areas discussed by the speakers
• It is also likely to foster new friendships
2-30
1.E Understand the Business:
Read Industry Publications
• News publications provide information on
new products, current issues, company
changes, and so on
• They provide better analyses of industry
trends, discussions of ongoing research, and
projections about the future
2-31
1.F Understand the Business:
Hold Informal Listening Sessions
•
Employees learn a lot by listening to each other’s
needs
•
Meetings are held in a setting that is not charged
with tension, participation is voluntary, and their
purpose is to “just chat”
2-32
1.G Understand the Business:
Partner with a Line Executive
•
The Society for Information Management presents an
award each year to honor an IS executive business
team who have achieved significant business results
through their alliance
•
It reinforces partnering which is needed to
successfully guide and deploy IT today
2-33
THE ‘KEY’
• UNDERSTAND THE BUSINESS
• TALK TO PEOPLE
2-34
1.2 Leading: Creating a Vision of the Future
and Selling It
•
IS executives are no longer reactive, providing only
support
•
They manage some of the most important tools for
influencing the firm’s future
•
They are becoming more “proactive” by helping to create a
vision of the firm’s future and its use of IT and selling those
ideas to others
2-35
1.2 Leading: Creating a Vision of the Future and
Selling It:
What is a Vision?
•
It is a statement of how someone wants the future to
be or believes it will be
•
“We will put a man on the moon and return him
safely to earth, by the end of the decade” – JFK,
early 1960s
2-36
1.2 Leading: Creating a Vision of the Future
and Selling It:
•
Beath and Ives present several corporate visions, e.g.:
–
Otis Elevator
•
–
Rittenhouse Homes
•
•
“Any salesperson can completely order an
elevator in a day”
“Customers can get a house designed and built
from a retail store”
Once a vision is in hand, then a strategy can be
formulated on how to bring the vision into being
2-37
1.2 Leading: Creating a Vision of the
Future and Selling It:
Why develop a Vision?
•
A vision of a desirable future can provide stability
when it sets a direction for an organization
–
Today most corporate visions have an IT
underpinning – leveraging the Internet for
business purposes
– That vision sets their direction
2-38
BP
Case example: Leading - Vision
• Main activities = exploration and production
of crude oil and natural gas
• The Business is in the Business Units
–
150 business units in 100 countries

Each have their own balance sheet and performance
contract
–
HQ must convince the business units of the
wisdom of BP-wide practices
–
Overarching this distribution of power is a set of
group-wide policies based on shared core values2-39
BP
Case example: Leading – Vision cont.
•
Digital Business (DB) Underpins Transformation
– 1999 = rare companywide mandate for a common
operating environment (COE)
– Early 2000 = formed Digital Business

Moved IT out of the beleaguered role of
technology provider into a strategy-creation role
2-40
BP

Delivered overarching strategy, enterprise
infrastructure and projects and standards
while supporting differentiated service
offerings driven by the business streams
•
DB Strategy and Chief of Staff
•
DB Chief Technology Office
•
DB Projects
•
DB Operations
2-41
BP
Case example: Leading – Vision cont.
•
Living on the Web
– Moving processes and systems to the Web and
simplifying both at the same time
•
Socializing Technical Directions
– Socialize the idea of a new common good to the
point where people accept it
– Technical choices are now made through businessbased networks of experts
2-42
BP
•
Going Forward: Foster Learning and Focus on
Explanation
–
Major challenge = fostering learning
–
Real leverage comes from the new value a new
system opens up
–
Bright people have been attracted to DB because
it is involved in the most important conversion:
where BP is going digitally
2-43
1.2 Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects
• A champion is someone with a vision who gets it
implemented by obtaining the funding, pushing the
project over hurdles, putting his or her reputation on the
line, and taking the risk of the project
2-44
Leading
•
The first step in encouraging champions is to find them
(they can’t be ‘appointed’!)
–
They are opinion leaders, and they have a reputation
for creative ideas or being involved with innovations
–
They have developed strong ties to others in their
organization, and they command respect within the
firm
–
They have the organizational power to get strategic
innovations implemented
2-45
1. Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects cont.
Information systems champions need three
things from IS Management:
1. They Need Information:
•
Champions need information, facts, and
expertise for persuading others that the
technology will work
•
Information systems people can help them find
the information they are lacking
2-46
1. Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects
2. They Need Resources:cont.
• Giving champions “free” staff time is especially
helpful during the evaluation and persuading portions of
a project
• Champions are likely to need material resources,
such as hardware and software
3. They Need Support:
• Champions need people who approve of what they
are doing and give legitimacy to their projects
2-47
Aetna Life and Casualty
Case example: ‘Champions’
•
Financial services company (employee benefit
and pension programs)
•
Much of their IT work is decentralised,
therefore the ‘Corporate Admn. Department’
focuses on 3 functions they call:
–
Plan
–
Build
– Run
2-48
Aetna Life and Casualty
Case example: ‘Champions’ cont.
•
They seek out ‘Business Champions’ who
think a technology might solve their business
problem(s)
•
Extensive use of:
•
–
Pilot Projects
–
Steering Committees
Challenges; especially making a future
technology credible to people today has been
one hurdle
2-49
2. Governing:
Establishing an IS Governance Structure

The term ‘Governance’ has become prominent in all
areas of business including IT.

IT Governance


“The assignment of decision rights and the accountability
framework to encourage desirable behavior in the use of IT”
Governance differs from management in that
2-50
2. Governing:
Establishing an IS Governance Structure
 Governance
is about deciding who makes decisions
whereas
 Management is about making decisions once
decision rights have been assigned

Numerous business scandals (U.S. – Enron, Global
Crossing etc.; Australia – HIH) have prompted the
increased interest in this area
2-51
2. Governing:
Establishing an IS Governance Structure
cont.

‘Governance’ has become more important in the IS
world because IT expenditures have become so large
and diverse that management has had to find a way
to bring order to all the decision making

Centralizing all IT decisions is not a solution
 All business units and local employees need a
voice in the decisions to tailor their business to the
local culture and customers
 Striking such a balance is a major IS emphasis
2-52
2. Governing:
Establishing an IS Governance Structure
cont.

Assigning Decision Rights (Figure 2-9)

Six governance styles (the rows)
1.
A business monarchy is where C-level executives
(CIO..) hold the right to make decisions
2.
IT monarchy = where IT executives hold the right to
make decisions
3.
Feudal is where business unit leaders (or delegates)
have decision or input rights
2-53
2. Governing:
Establishing an IS Governance Structure
cont..
4.
Federal means that the rights are shared by C-level
executives and one other tier of the business hierarchy
5.
A duopoly is where one IT group and one business group
share a right
6.
Anarchy is where individual process owners or end users
hold a right
2-54
2. Governing:
Establishing an IS Governance Structure
cont.

Assigning Decision Rights (Figure 2-9)

Five decision areas (the columns)
1.
IT principles are high-level statements about how IT
will be used to create business value
2.
IT infrastructure strategies state the approach for
building shared and standard IT services across the
enterprise
2-55
2. Governing:
Establishing an IS Governance Structure
cont.
3.
IT architecture states the technical choices that will meet
business needs
4.
Business application needs is where the business
defines its application needs
5.
IT investment and prioritisation defines the process for
moving IT-based investments through justification,
approval and accountability
2-56
2. Governing:
Establishing an IS Governance Structure
cont.
2-57
Duke Energy International
Case example: IS Governance

US HQ but operates all over, esp. Latin America –
manages a diverse portfolio of natural gas and
electric supply, delivery, and trading businesses

Product and service innovation combined with speed and
flexibility are key drivers
2-58
Duke Energy International
Case example: IS Governance…

IT Governance is based on Principles and
Relationships

8 Principles in managing Information Management (IM):
1.
2.
3.
4.
5.
6.
7.
8.
Agree on the reason for being
Have a vision for IM
Put a clear organizational design in place
Implement successful IT governance
Implement demand management
Design useful reporting information flows
Manage business-IM value relationships
Implement global collaborative networks
2-59
Duke Energy International
Case example: IS Governance cont.

Regional CIOs follow these guidelines:

I will involve others if the consequences of my
actions affect others

I will not involve others if it just affects me

I will inform others when the consequences of my
actions will be of benefit to others
2-60
Duke Energy International
Case example: IS Governance cont.

Aims to foster relationships with the business
which:

Increase nimbleness

Help identify opportunities (save costs)

Lead to innovation
2-61
3. Investing:
Shaping the IT Portfolio

IT investments are large and important to
company success
 How
to make such investments is getting
increased attention

Business executives can no longer “blame
CIOs” for poor IT investments
 CIOs
can only implement good systems
 They are not responsible for changing business
practices to take advantage of those systems

= the job of line executives!
2-62
3. Investing:
Shaping the IT Portfolio – A Strategic View of
Making IT Investments

Intense competition in ‘non-regulated’
industries forced executives in these to
innovate
 By
investing in IT
 By improving their business processes, and
 By offering new products and services

These innovations, in turn, increased
productivity
 Virtuous circle (Figure 2-10)
 Competition leads to innovation, which leads to
productivity increases
2-63
2-64
3. Investing:
Shaping the IT Portfolio – A Strategic View of Making IT Investments cont.

Sequencing and timing IT investments
 Companies
that reaped the highest
productivity generally sequenced their IT
investments so that new ones built on
existing ones
 Timing is also important
‘Rush in’ only when it advances company
goals, builds on strengths and cannot be easily
replicated by competitors
 ‘Everybody is doing it’ = not a good reason

2-65
Wal-Mart Vs. Kmart
Case example: Sequencing and timing IT investments

Wal-mart

First installed systems to automate the flow of products in its
internal supply chain

Then = turned outward to suppliers co-ordinating its own
operations with theirs

Then turned to customers to better plan its merchandising
mix and replenishment

‘Last’ = data warehouse
2-66
Wal-Mart Vs. Kmart
Case example: Sequencing and timing IT
investments…

Kmart = did not get the sequence right

First = used IT to target its marketing promotions Vs. investing in
supply chain

As a result – increase in demand from successful promotions
could not be met due to problems getting products into stores

Lost sales and $$$$
2-67
3. Investing:
Shaping the IT Portfolio – A Strategic View of
Making IT Investments cont.

Complementing IT investments
 IT
investments do not reap anticipated
results until accompanying management
practices change to take advantage of
potentially better ways of working
 NOTE:
IT is not the only contributor to
increased productivity
2-68
3. Investing:
Shaping the IT Portfolio – A Tactical View of Making IT Investments

Much attention has been placed on shaping
the IT portfolio as business executives seek
to maximize the business value of their 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
“Doing more with less”
2-69
AXA Financial
Case example: Prioritizing projects

AXA Group = global financial services
organization with 140,000 employees

Introduced a governance process to instill more
efficient management controls
 Key
principle = not all projects and investments are
created equally

Each one’s merit depends on its economics, not on
executives’ emotional attachment to it or other non financial
factors
2-70
AXA Financial
Case example: Prioritizing projects cont.

Introducing a New Methodology

The Prioritization Process
 Winnowing the Wish List

Selecting Business Objectives

Prioritizing the Objectives

Ranking Projects Using the Objectives

Funding the Projects
2-71
AXA Financial
Case example: Prioritizing projects cont.

The process uses 4 filters:

The EVP’s wish list filter
The must-have/should-have filter
The UMT prioritization filter, and
The business case filter
The result is a list of projects that can be funded

Benefits of the Project Prioritization Process

Future Plans
1.
2.
3.
4.
2-72
3. Investing:
Shaping the IT Portfolio

cont.
Benefits Come More From the Discussions Than the
Prioritizations

When the discussions are structured, focused and well moderated,
the participants better understand the business goals, better
support others and other business units and are more committed

Leads to:

Healthier teamwork

Better decision processes, and

Better definitions of projects
2-73
3. Investing:
Shaping the IT Portfolio cont.

Put Projects into Categories Where They Are
Comparable
 Once
defined, projects belong in different categories
and thus require different treatment

E.g. R&D projects can’t generate immediate
tangible benefits

Have a minimum $ - projects below this should be
funded from discretionary budget
2-74
3. Investing:
Shaping the IT Portfolio cont.

Address Project Risks
1.
Risk that project will fail

2.
Risk of not doing the project

3.
Need mitigation strategies and include cost thereof in the
project cost
E.g. Virus protection
Risk that it is the wrong project for what is trying to be
achieved
2-75
3. Investing:
Shaping the IT Portfolio cont.


Prioritize Quarterly, and Apportion Your Budget
Accordingly

Not wise to close the approved list of projects for a long time

Track projects and if significant deviations = consider project
costs, risks and benefits
Be Consistent
2-76
4. Managing:
Establishing Credibility and Fostering
Change

CIOs are in the change business

Information systems bring about change

BUT – before a CIO and the IS organization will be heard as a
voice for change, they must be viewed as being successful and
reliable

To foster change, a CIO must establish and then maintain the
credibility of the IS organization
2-77
4. Managing:
Establishing Credibility

The first job of IS management is to get the “today”
operation in shape


Until that task is accomplished, CIOs will have little credibility
with other top management
Managing “today” includes:

Computer operations

Technical support (including networks)
2-78
4. Managing:
Establishing Credibility conti..





The help desk, and
Maintenance and enhancement of existing systems
Delivery oriented with a high level of service
Some = outsource parts
Once you have “today” working well – they will listen to
you re “tomorrow”
2-79
4. Managing:
Fostering Change

‘Techies’ presume a technically elegant
system is a successful one
 Not
so. Many technically sound systems have
turned into implementation failures because the
people side of the system was not handled
correctly

IT is all about managing change
 New
systems require changing how work is done
 Focusing on the technical aspects is only ‘half’ the
job. The other job is change management
2-80
4. Managing:
Fostering Change cont.



People resist change, especially technological
change
May react in several ways:
 Deny, distort or delude
ODR (and others) methodology:
 Sponsor
 Change agent
 Target
2-81
4. Managing:
Fostering Change cont.

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 buy-in to building / using interbusiness systems
2-82
REXAM
Case example: Working across
organizational lines

One of the world’s top 5 consumer packaging
companies and the world’s top drink can maker

Rethinking Interactions with Customers
 Initial
doubts Vs. “If we can demonstrate value to
them they will (use it)”
 Benefits
of the Project Prioritization Process
2-83
REXAM
Case example: Working across
organizational lines

Phase 1: CRM Made Simple

Testing the System with Customers

Phase 2: Knock Customer’s Socks Off

Competitive advantage? – They’ll ‘never leave’!

The CIO’s Role

The Steering Committee’s Role
2-84
REXAM
Case example: Working across organizational
lines cont.

Rexam case illustrates a number of points
about the CIO’s current role:
1.
CIOs are working outside as much as inside
these days
2.
They are working in concert with their peers in
the company in selling and implementing their
visions
2-85
REXAM
Case example: Working across
organizational lines cont.
3.
To stay ahead they need to keep their staffs
experimenting with new technologies
4.
Selling the vision occurs one customer, supplier or
executive at a time
–
Need to know how ‘IT ready’ a customer, supplier,
executive, department or group is
2-86
Conclusion
•
IT decision making must be ‘shared’ - The main
responsibility for managing the use of IT needs to pass to
the line, while the management of the IT infrastructure is
retained by the IS group
•
It is reflected in the following saying:
1. “We used to do it to them”- IS required end users to
obey strict rules for getting changes made to systems,
submitting job requests, etc.
2-87
Conclusion Conti..
2.
Next, we did it for them”-IS moved to taking a service
orientation
3.
“Now, we do it with them”-which reflects “partnering”
4.
“We are moving toward teaching them how to do it
themselves”
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Conclusion cont.
•
To achieve this transformation, CIOs must play a
leadership role in their enterprise and develop
partnerships with senior management, internal and
external customers, and suppliers
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Summary





Traditional Functions Are Being Nibbled Away
Roles
Toward IS Lite
The CIO’s Responsibilities
Four Aspects of the CIO role
2-90