1. Information Systems Management In 8E Modified By: Dr Heba Mohammad
The Top IS Job
Chapter 2
Information Systems Management In 8E
McNurlin & Sprague
Modified By: Dr Heba Mohammad
©2006 Barbara C. McNurlin. Published by Pearson Education.

2. Introduction
Management of IT has changed drastically in the past 50 years
Early days = the big job was to manage the technology:
Get it to work
Keep it running
Reduce cost of doing business
Then = manage the information resources
Support (management) decision making
Delivering information when and where it was needed
Now = IT is pervasive and is a mandatory link between enterprises
©2006 Barbara C. McNurlin. Published by Pearson Education.

3. Introduction cont.
The roles and responsibilities of IS organization have been evolving since the first Data processing department were formed in the 1950s.
Responsibilities of the head of IS now go far beyond operating highly efficient ‘production programming shops’
These executives are now part of top management and help form the goals of the enterprise in partnership with the CEO, CFO and other members of top management
©2006 Barbara C. McNurlin. Published by Pearson Education.

4. Where Is The IS Organization Headed?
The Escalating Benefits of Information Technology
Kenneth Primozic, Edward Primozic, and Joe Leben introduce the notion of “Waves of Innovation” which they define as how IT is used by industries and enterprises.
There are 6 Waves of Innovation (Figure 2-1):
Reducing cost
Leveraging investments
Enhancing products and services
Enhancing executive decision making
Reaching the consumer
Leveraging partnership through supply-chain management or other collaboration.
……………………………………………………………………………………
©2006 Barbara C. McNurlin. Published by Pearson Education.

5. Where Is the IS Organization Headed?
Escalating Benefits of IT
©2006 Barbara C. McNurlin. Published by Pearson Education.

6. Waves of Innovation - Below the line (Saving $)
Wave 1: Reducing costs
Began in the ’60s
Focused on increasing the productivity of individuals and business areas.
The goal was to achieve clerical and administrative savings by automating manual processes.
©2006 Barbara C. McNurlin. Published by Pearson Education.

7. Wave 2: Leveraging Investments
Began in the ’70s
Concentrated on more effective use of corporate assets to increase profitability
Systems were justified on ROI, cash flow etc
Wave1+Wave2 focus on money saving not making money.
Systems developed for administration, finance and manufacturing.
©2006 Barbara C. McNurlin. Published by Pearson Education.

8. Waves of Innovation - Above the line (Making $)
Wave 3: Enhancing Products & Services
Began in the ’80s
Attention shifted to using IT to produce revenue by gaining strategic advantage or creating entirely new businesses or increase
Market share.
IT was used to improve outward-looking functions such as marketing, distributing, customer services.
©2006 Barbara C. McNurlin. Published by Pearson Education.

9. Waves of Innovation - Above the line (Making $)
Wave 4: Enhancing executive decision making
Began in the later ’80s
focused on changing the fundamental structure of the organization
Creating real-time business management systems
©2006 Barbara C. McNurlin. Published by Pearson Education.

10. Waves of Innovation - Above the line (Making $) cont.
Wave 5: Reaching the Consumer
Began in the ’90s
Uses IT to communicate directly with consumers leading to new:
Marketing
Distribution, and
Service strategies
Changes the rules of competition
©2006 Barbara C. McNurlin. Published by Pearson Education.

11. Waves of Innovation - Above the line (Making $) cont.
Wave 6: LEVERAGING PARTNERSHIP THROUGH SUPPLY CHAIN MANAGMENET OR OTHER FORM OF COLLABORATION
Began in the late ’90s
Uses IT allows companies to share information and business processes,
Businesses have been able to form alliances, setting up cross-boundary supply chains (travel companies)
.partnerships are customer driven and operate in real time mode.
Management must be involved in guiding IT use once you ‘cross the line’
Management must steer the company in the new (evolved) business environment
Not the ‘techies’
©2006 Barbara C. McNurlin. Published by Pearson Education.

12. Waves of Innovation - Above the line (Making $) cont.
Case Example: American Airlines and the Saber system
Wave 1 & 2:
the first introduction of a seat reservation system was in one office of the company and 4 years later at all offices.
Reduce costs of making airline seat reservations
The system moved American from a manual –based reservation operation to a computer-based one.
Wave 3:
Expanded the system to be used by travel agents and trigger the wave of travel automation:
Give them ability to do direct reservation
prepare trip tour and schedule
Find the low fares
Adopt win-win strategy:
Facilitating the direct access by travel agencies to reserve seats and others
Increased barriers to agents switch to another carrier’s reservation systems
©2006 Barbara C. McNurlin. Published by Pearson Education.

13. Waves of Innovation - Above the line (Making $) cont.
Case Example: American Airlines and the Saber system
Wave 4:
Transforming the American company from airline company to a travel company and the entire industry .
Sabre become an independent entity from the AMR .
Released the revenue management systems, allowing the airline to maximize income with a better pricing scheme.
The company offered services for yield management and crew scheduling and a host of decision support tools.
Wave5:
Introduced AAdvantage, flyer program to fly American and gain points for free trips.
Allying the program with credit card and long/distance telephone companies.
Offering free miles for customers who use these companies
Enhance the interaction with its customers via the web. (the 1st airline developed a web site)
Plan their trip via internet
Buy tickets online
Obtain real-time flight information such as arrival and departure
©2006 Barbara C. McNurlin. Published by Pearson Education.

14. Waves of Innovation - Above the line (Making $) cont.
Case Example: American Airlines and the Saber system
Wave 5:
Names of the movies being shown on flights could be accessed
After introducing the website the telephone to call center had been dropped significantly.
Targeted its profitable customers- members of Aadvantage-
Give them better control on their travel planning and rescheduling reservation
See their accumulated points of free miles.
Give more free miles for customers who use the website more and its services.
Sabre system become a n industry standard
Had a joint venture with ABACUS international to enter the Asia market.
Wave 6:
Works with Citibank to offer ‘Citibank AAdvantage”.
Use the website to do different offers to their customers ( to promote the unsold seats)
Acquires SynXix corporation, which runs hotel reservations
Purchases Show Tickets.com, a leading distributor of show tickets and tours in Leas Vegas.
©2006 Barbara C. McNurlin. Published by Pearson Education.

15. Waves of Innovation - Above the line (Making $) cont.
SABRE HOLDINGS IS THE LEADING PROVIDER OF TECHNOLOGY,
DISTRIBUTION , AND MARKETING SERVICES FOR THE TRAVEL INDUSTRY.
WITH ITS TECHNOLOGY, SABER OWNS TRAVELOCITY.COM,
THE WORLD’S LEADING ONLINE B2C TRAVEL SITE
SABRE TRAVEL NETWORK, WHICH INCLUDES THE WORLD’S LARGEST
GLOBAL DISTRIBUTION SYSTEMS CONNECTING TRAVEL AGENTS AND
TRAVEL SUPPLIERS WITH TRAVELERS.
SABRE AIRLINE SOLUTIONS, THE LEADING PROVIDER OF DECISION-
SUPPORT SOLUTION OF AIRLINES.
©2006 Barbara C. McNurlin. Published by Pearson Education.

16. 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):
Run operations: : running computers and net works
Develop systems: maintaining systems, Designing new systems, updating existing one
Develop architecture
Identify business requirements :what the business needs from IT
Over time, IS’s role has decreased in jobs 1 and 2, as these technical aspects have been outsourced, and its role has increased in jobs 3 and 4. Plus it has become the broker between providers and users.
©2006 Barbara C. McNurlin. Published by Pearson Education.

17. The two technical activities (computer operation, development and maintenance) that focus on
cost efficiency are less important to the business, and they can be purchased because they are commodity-like. While the other two activities (system architecture and requirements identification) are much greater to the enterprise because they add value to the enterprise and can not be purchased because they are unique to each organization.
©2006 Barbara C. McNurlin. Published by Pearson Education.

18. CIO Responsibilities
©2006 Barbara C. McNurlin. Published by Pearson Education.

19. Four Aspects of the CIO role
Leading: Creating a vision by understanding the business
Governing: Establishing an IS Governance structure
Investing: Shaping the IT portfolio
Managing: Fostering change
©2006 Barbara C. McNurlin. Published by Pearson Education.

20. 1. Leading: Creating a Vision by Understanding the Business
There are seven approaches CIOs are using to understand the business and its environment:
Encourage project teams to study the marketplace
Concentrate on lines of business
Attend industry meetings with line executives
Read industry publications.
Hold informal listening sessions
©2006 Barbara C. McNurlin. Published by Pearson Education.

21. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

22. 1.B Understand the Business:
Concentrate on Lines of Business
It is recommended to ask the following questions about each line of business:
Are we organized to serve that line of business?
Do we have an account manager in IS who has responsibility for that line of business?
Do we have someone within that line of business who oversees IT activity and talks the business language?
Do we have a sponsor in the line of business?
Do we have the attention of their management?
Does the line of business offer an opportunity to use systems in new ways?
A line of business is an organizational unit that conducts business activities with common customers, products and market characteristics
IT can serve LOB in two ways: 1. supporting the current operations alignment
2. Using systems to influence future ways of working /impact
©2006 Barbara C. McNurlin. Published by Pearson Education.

23. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

24. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

25. 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”
©2006 Barbara C. McNurlin. Published by Pearson Education.

26. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

27. 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
Beath and Ives present several corporate visions, e.g.:
Otis Elevator
“Any salesperson can completely order an elevator in a day”
Rittenhouse Homes
“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
©2006 Barbara C. McNurlin. Published by Pearson Education.

28. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

29. 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
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
©2006 Barbara C. McNurlin. Published by Pearson Education.

30. 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
Governance is about deciding who makes decisions whereas
Management is about making decisions once decision rights have been assigned.
©2006 Barbara C. McNurlin. Published by Pearson Education.

31. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

32. 2. Governing: Establishing an IS Governance Structure cont.
Assigning Decision Rights (Figure 2-9)
Six governance styles (the rows)
C-level executives (CIO..) hold the right to make decisions
IT executives hold the right to make decisions
business unit leaders (or delegates) have decision or input rights
C-level executives and one other tier of the business hierarchy
one IT group and one business group share a right an IT-business-unit committee.
individual process owners or end users hold a right
©2006 Barbara C. McNurlin. Published by Pearson Education.

33. 2. Governing: Establishing an IS Governance Structure cont.
Assigning Decision Rights Five decision areas (the columns)
IT principles are high-level statements about how IT will be used to create business value.
IT infrastructure strategies state the approach to building shared and standard IT services across the enterprise. This decision area is technical, so it is generally made by an, IT monarchy often with federal input.
IT architecture states the technical choices that will guide meeting business needs. Again, this is a technical decision area, so it is generally left up to the IT monarchy, with federal input.
Business application needs, the fourth key IT decision area, is where the business defines its application needs. These decisions, and input to them, are generally federal.
IT investment and prioritization defines the process for moving IT-based investments through justification, approval, and accountability.
©2006 Barbara C. McNurlin. Published by Pearson Education.

34. 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!
©2006 Barbara C. McNurlin. Published by Pearson Education.

35. 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, 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

36. 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)
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 “tomorrow”
©2006 Barbara C. McNurlin. Published by Pearson Education.

37. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.

38. 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: who authorizes the change, contains someone from the top manag.
Change agent: is staff, cause the change to happen
Target: who is being expected to change
Change management is the process of assisting people to make major changes in their working enviorment
©2006 Barbara C. McNurlin. Published by Pearson Education.

39. 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 inter-business systems
©2006 Barbara C. McNurlin. Published by Pearson Education.

40. The Office of the CIO?
Some believe the office of the CIO is so broad it should be handled by a team
Four ‘positions’:
Chief Information Officer
Heads IS and works with top management, customers and suppliers
Chief Technology Officer
Heads IT planning, which involves architecture and exploration of new technologies
Chief Operations Officer
Heads day-to-day IS operations
Chief Project Officer
Oversees all projects and project managers
IT is so critical to enterprise success and the know-how needed to run it so deep and wide = management needs to become a team effort
©2006 Barbara C. McNurlin. Published by Pearson Education.

41. 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:
“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.
“Next, we did it for them”-IS moved to taking a service orientation
“Now, we do it with them”-which reflects “partnering”
“We are moving toward teaching them how to do it themselves”
©2006 Barbara C. McNurlin. Published by Pearson Education.

42. 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
©2006 Barbara C. McNurlin. Published by Pearson Education.