1. Chapter 2 Information Systems Management in Practice 8th Edition
The Top IS Job
Chapter 2
Information Systems Management in Practice
8th Edition

2. Today’s Lecture Introduction Where is the IS organization headed?
The escalating benefits of information technology
Traditional functions are being “nibbled away”
New roles are emerging
Toward “IS Lite”

3. Today’s Lecture cont’d
The CIO’s responsibilities
CIO’s roles in 3 eras
Leading
Creating a vision by understanding the business
Governing
Establishing an IS Governance Structure
Investing
Shaping the IT portfolio
Managing
Establishing credibility and fostering change

4. Today’s Lecture cont’d
The Office of the CIO
Whither CIOs
Conclusion
Questions and Exercises
References

5. Introduction Growing demand for IT managers in the U.S. and worldwide.
Management of IT in past 50 years has drastically changed.
Basic functioning  cost reduction  decision support  inter-organizational supply-chain and “business eco-system”
Onus on top executives to provide IT vision and leadership.

6. Where is the IS organization headed?

7. Escalating Benefits of IT
Changing technology and evolving IS role since 1950s. (a parallel process)
“Waves of Innovation”:
Wave 1: Reducing costs
Wave 2: Leveraging investments (continuous improvement)
Wave 3: Enhancing products and services
Wave 4: Enhancing executive decision-making
Wave 5: Reaching the consumer
Wave 6 (new): Leveraging partnerships through supply chain management or other forms of collaboration

8. Escalating Benefits of IT (cont’d)

9. The SABRE System (American Airlines)
Case example of “Waves of Innovation”
Evolution: Handwritten reservation system (1950s) to Web-based system (2000s).
Waves 1 and 2 (1960s)
SABRE (CRS) built to reduce costs of making airline seat reservations.
ROI on staff expenditure.
Wave 3 (1970s)
System enhanced to span organizational boundary for travel agents (provide direct access to CRS)

10. The SABRE System (American Airlines) cont’d
Wave 4 (late 1980s)
Revenue Management System (provide decision support to managers) under SABRE Airline Solutions (new division).
Wave 5 (1990s)
System extended to provide direct Web access to customers (CRS, flight information, movie etc.)
Wave 6 (2000s)
Sabre (small letters) spun off from AMR in 2000, leveraged partnerships and technology.

11. The SABRE System (American Airlines) cont’d
Throughout waves of innovation, strong IS involvement was crucial.
Evolving with changes in technology
From money-making to extending organizational boundaries to spinning off.
So what is the function of the IS organization?

12. Traditional Functions are Being Nibbled Away
Traditional set of responsibilities for IS
Managing operations of data centers, local and remote systems and networks
Managing corporate data and legacy systems
Performing system analysis and design and constructing new systems
Planning and integration of systems
Identifying opportunities for new systems

13. Traditional Functions are Being Nibbled Away cont’d
Trends that are moving traditional roles out of IS:
Distributed Systems
Migration of software applications to user areas
Ever more knowledgable users
Better application packages
Systems development to integration
Outsourcing
Based on fiscal and managerial considerations

14. Traditional Functions are Being Nibbled Away cont’d

15. New Roles are Emerging IS involves a cluster of functions:
Run operations
Develop systems
Develop architecture
Identify business requirements
Create IT-enabled innovations

16. New Roles are Emerging cont’d
Different set of skills and management strategy needed for each function:
Maximize efficiencies of IT operations
Better allocation of IT personnel time
Prioritize resources to demonstrate usefulness of new software projects
IT-enabled business innovations

17. New Roles are Emerging cont’d

18. Toward IS Lite
IS started “centralized” and then evolved into “federal” model.
Some things (e.g standards, operations) centralized
Others (e.g. applications development) dispersed to best meet local needs.
Solution: shift attention from roles to processes
IS Lite: managing three overall processes
Driving innovation (dispersed)
Managing change (dispersed)
Supporting infrastructure (centralized)

19. Toward IS Lite

20. LifeScan Case example: The “Federal” Model
Johnson and Johnson subsidiary
New CIO with business-IS alignment agenda
3-stage framework that is focused on execution and performance measurement (value, on time, budget)
Stage 1: backend (supporting infrastructure)
Stage 2: start working with business units (change, innovation etc.); value measured by business units e.g. business score cards.
Stage 3: melding of business units and IS; value measured by firm performance

21. LifeScan cont’d
Strong project management, not allowing scope creep (business value, on time, within budget)
Emphasis on staff with leadership and brokering skills
Outsourcing (Tata, J&J outsourcing agreements)
Adopt J&J quality-driven culture into IS processes and working closely with business units for alignment every step of the way.
Centralization of policies, procedures etc.
All IS projects business led and locally owned by business units.

22. The CIO’s Responsibilities
Evolution of CIO’s job emphasis over last 20 years
Almost like a “bell curve”
80s: Chief architect (strategic use of IT)
90s: addressing business issues (more than technology manager)
Late 90s to early 2000s (forefront role)
Mid 2000s onwards: slide back toward back seat--more responsibilities, lots of justification and less $

23. CIO Roles in Three Eras
Jeanne Ross (MIT) and David Feeny (Oxford)

24. CIO Roles in Three Eras The Mainframe Era Distributed Era
Predominated 1960s – early ’80s
Role of DP / IS manager = operational manager of a specialist function
Distributed Era
In the ’80s as PCs become commonplace
LANs and WANs linking computers
Took on 4 more roles:
Organizational designer
Technology advisor
Technology architect
Informed buyer

25. CIO Roles in Three Eras The Web Era
Started in the mid-1990s for some
Arose from the emergence of the Internet (especially WWW) as a business tool
Era is still in “infancy” but add to the CIOs job, the role of business visionary
Relationship between CEO and CIO vary along a wide spectrum.

26. CIO Roles Today Leading Governing Investing Managing
Creating vision by understanding the business
Governing
Establishing an IS governance structure
Investing
Shaping the IT portfolio
Managing
Establishing credibility, managing IT functions, and fostering change

27. Leading: Creating vision by understanding the business
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

28. Leading: Creating vision by understanding the business

29. Leading: Creating vision by understanding the business
Creating a vision of the future and selling it
CIO must be proactive and not simply reactive
A leader not a follower
What is a vision?
Statement of perceived future
Why develop a vision?
A vision of a desirable future can provide stability when it sets a direction for an organization
Selling the vision

30. British Petroleum (BP)
Case example of creating a vision of the future and selling it
150 business units in 100 countries
Each with own balance sheet and performance criteria
Need to reconcile business unit independence with overarching HQ strategy (“speed matters”)
Strong core values and operational excellence
How can IT be a value-add?

31. British Petroleum (BP)
John Leggate’s “Digital Business” vision.
Technology provider to strategy-creation role
Strategy, architecture, differentiated services based on business streams (processes)
Living on the Web
Socializing technical directions (adoption)
Going forward: Foster learning and focus on explanation (assimilation)

32. Leading: Creating vision by understanding the business
Creating a vision of the future and selling it (cont’d)
Encouraging champions of IT projects
“Boundary-spanner-in-practice”
Typically someone with authority
Need information
Need resources
Need support
Champion: someone (outside of department) with a vision who gets it implemented by obtaining the funding, pushing project over hurdles, putting his or her reputation on the line, and taking on the project risks.
Boundary spanner: suitable for business processes and streams

33. Aetna Life and Casualty
Case example of creating a vision of the future and selling it
Vision: “breakthrough technologies”
Sought out business champions
Pilot studies
Feedback for new technologies experimentation
Steering Committees
Challenges
Adoption (attention and use)
Value (beyond piecemeal payoffs)

34. Governing: Establishing an IS governance structure
Definition: IS Governance
“The assignment of decision rights and the accountability framework to encourage behavior in the use of IT.” (Weill & Woodham, 2002)
Governance versus management
Governance is about deciding who makes decisions.
Management is about making decisions once decision rights have been assigned.

35. Governing: Establishing an IS governance structure
Importance of corporate IT governance
Large and diverse IT assets
Striking a balance between global and local needs
IT portfolio (in sync with business needs)
Assigning decision rights
Governance style
Definition: who has a decision right and input right.
Six governance styles

36. Governing: Establishing an IS governance structure

37. Duke Energy International
Case example of IS governance
Diverse portfolio of natural gas and electric supply, delivery and trading businesses.
CIO: “When am I free to decide on my own versus when should I involve others?”
I involve others if the consequences of my actions will come to bear on those others.
I do not involve others if the consequences of my actions will come to bear just on me.
I inform others when the consequences of my actions will be of benefit to others.

38. Investing: Shaping the IT Portfolio
Diminishing marginal increase today but still preposterous amount of IT investments.
Two perspectives in IT investment:
Strategic view
What to invest in?
Tactical view
How to make investment decisions?

39. Investing: Shaping the IT Portfolio
A Strategic view of making IT investments
McKinsey Global Institute study of “new economy”
IT, competition, innovation and productivity in virtuous circle
Targeting IT investments
Prioritizing on “levers that matter” = greatest productivity
Timing of IT investments
Based on company needs and goals

40. Investing: Shaping the IT Portfolio cont’d

41. Investing: Shaping the IT Portfolio
Sequencing of IT investments
Wal-mart versus Kmart case example
Complementing IT investments
“The whole is not the sum of its parts” (synergy)
Complementarities between management practices, business processes and technology

42. Wal-mart versus Kmart
Case example: Sequencing and timing IT investments
Wal-mart
Step 1: installed systems to automate the flow of products in its internal supply chain
Step 2: turned outward to suppliers, coordinating its own operations with theirs
Step 3: turned to customers to better plan its merchandising mix and replenishment
Step 4: data warehouse

43. Wal-mart versus Kmart Kmart
Mistake: used IT to target its marketing promotions versus investing in supply chain
Result: increase in demand from successful promotions could not be met due to problems getting the products into stores in a timely fashion.
Result: lost sales and revenues

44. Investing: Shaping the IT Porfolio cont’d
A tactical view of making IT investments
Portfolio (holistic) approach to deciding on how to make IT investment decisions.
Numerous approaches to prioritizing
Business Scorecards
80-20 Principle
Cost-Benefit analysis (CBA)
Net Present Value (NPV)

45. AXA Financial Case example of tactical view of making IT investments
French global financial services organization with 140,000 employees and managing $795 billion in assets.
New governance methodology (beyond IT)
Economics-informed investments (precludes emotional attachment or other non-financial factors)
Modeled after fund management
Governance committee involve all C-level executives

46. Investing: Shaping the IT Portfolio cont’d
Benefits from Discussions
Categorizing projects for comparisons
Address project risks
Prioritize quarterly and apportion your budget accordingly
Consistency (team decision-making)

47. Managing: Establishing Credibility and Fostering Change
CIOs must first establish credibility in IS before change can come about.
Establishing Credibility
Focus first and foremost on the “today” even before talking about the “tomorrow”
Deliver value-added, quality services
First impression matters

48. Managing: Establishing Credibility and Fostering Change
Technical aspects only half the battle
Emphasis on change management
Changing the way people work, bringing it to the next level
Disruptive to current work practices
Leads to resistance
Methodologies to implement IT-enabled change

49. Managing: Establishing Credibility and Fostering Change
Working across organizational lines
CIOs now find that systems they implement affect people outside their firm boundaries
Arms-length to more cordial relationship with partners (suppliers and customers)
Change need buy-in from these external stakeholders

50. REXAM Case example of 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 (B2B)
Leverage Internet to deliver “exceptional service”
“Knock their socks off”
Result: cash flow improvements, barriers to switching, profit increase

51. REXAM cont’d CIO’s role Steering Committee’s role Online catalogue
External and business-oriented
Convincing existing customers and business development
Steering Committee’s role
Firm-wide commitment from C-level executives for expanded e-business initiatives envisioned by CIO.
Online catalogue

52. The Office of the CIO Chief Information Officer (CIO)
Top management, customers, suppliers
Chief Technology Officer (CTO)
IT planning, architecture, new technologies
Chief Operations Officer (COO)
Daily IS operations
Chief Project Officer (CPO)
Projects management

53. Conclusion: Recap Why does the IS organization exist?
Constant factor in parallel process of technological changes and IS evolution
What is the role of the IS organization?
Changing across the timeline toward IS Lite
CIO’s job
How does the IS organization perform its job
Strategies

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Publishing as Prentice Hall