1. E. Wainright Martin Carol V. Brown Daniel W. DeHayes Jeffrey A. Hoffer William C. Perkins MANAGINGINFORMATIONTECHNOLOGY FIFTH EDITION CHAPTER 15 M ANAGING THE I NFORMATION S YSTEMS F UNCTION

2. © 2005 Pearson Prentice-Hall Chapter 15 - 2 Rapid technological change Exploding applications and data Growth in business management understanding of technology Frequent external shocks T HE C HALLENGES F ACING IS L EADERSHIP Page 582-583

3. © 2005 Pearson Prentice-Hall Chapter 15 - 3 IS leadership must manage these organizational assets:   Human resources   Organizational data   Physical infrastructure   Applications portfolio M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 583-584 Most important asset in the IS organization is its people!

4. © 2005 Pearson Prentice-Hall Chapter 15 - 4 Provide specialized IT training for IS professionals and others M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 584 Developing Human Resources

5. © 2005 Pearson Prentice-Hall Chapter 15 - 5 M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3) Possible IS Management Positions

6. © 2005 Pearson Prentice-Hall Chapter 15 - 6 M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (2 of 3) Possible IS Management Positions

7. © 2005 Pearson Prentice-Hall Chapter 15 - 7 M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 584-585 Figure 15.1 Selected IS Management Positions (3 of 3) Possible IS Management Positions

8. © 2005 Pearson Prentice-Hall Chapter 15 - 8 Develop policies and procedures to manage an IT system’s physical assets – computer hardware and networks M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 584 Improving the Physical Infrastructure

9. © 2005 Pearson Prentice-Hall Chapter 15 - 9 Infrastructure management issues addressed in policy statements: 1. 1.Location 2. 2.The workstation 3. 3.Supported operating systems 4. 4.Redundancy 5. 5.Supported communications protocols M ANAGING THE A SSETS IN AN IS O RGANIZATON Page 586-588 Improving the Physical Infrastructure

10. © 2005 Pearson Prentice-Hall Chapter 15 - 10 Infrastructure management issues addressed in policy statements (cont.): 6. 6.Bandwidth 7. 7.Response time on the network 8. 8.Security versus ease of access 9. 9.Breadth of network access 10. 10.Access to external data services M ANAGING THE A SSETS IN AN IS O RGANIZATON Improving the Physical Infrastructure Page 586-588

11. © 2005 Pearson Prentice-Hall Chapter 15 - 11 Most companies cannot operate without software applications – they are critical assets Just as physical infrastructure, software portfolio needs managed as an asset M ANAGING THE A SSETS IN AN IS O RGANIZATON Managing the Applications Portfolio Page 588

12. © 2005 Pearson Prentice-Hall Chapter 15 - 12 A company must know:   What software it owns   Where it is located   What it does   How effective it is   What condition it is in M ANAGING THE A SSETS IN AN IS O RGANIZATON Managing the Applications Portfolio Page 588

13. © 2005 Pearson Prentice-Hall Chapter 15 - 13 Policies and guidelines must exist for the development and maintenance of IS applications Maintenance should be treated as an activity necessary to preserve an asset’s value M ANAGING THE A SSETS IN AN IS O RGANIZATON Managing the Applications Portfolio Page 588

14. © 2005 Pearson Prentice-Hall Chapter 15 - 14 Application portfolio policies must address: 1. 1.Assumed user 2. 2.Application location 3. 3.Process-driven or data-driven design 4. 4.Evaluation criteria for new applications systems M ANAGING THE A SSETS IN AN IS O RGANIZATON Managing the Applications Portfolio Page 588-590

15. © 2005 Pearson Prentice-Hall Chapter 15 - 15 Process-Driven Design  Collects, manipulates, and stores only data needed to operate a particular process  Most often used in the past Data-Driven Design  Concentrates on all data needed and collects into database  Each application accesses common database for needed information Managing the Applications Portfolio Page 589-590 M ANAGING THE A SSETS IN AN IS O RGANIZATON

16. © 2005 Pearson Prentice-Hall Chapter 15 - 16 Ten key issues: 1. 1.Developing effective change management system (Chapter 12) 2. 2.Ethical use of IT (Chapter 16) 3. 3.Agreeing upon the role of the IS organization 4. 4.Selecting effective IS leadership 5. 5.Creating an active partnership with business managers 6. 6.Determining an outsourcing strategy 7. 7.Designing an equitable financing system 8. 8.Deploying global information systems 9. 9.Designing an appropriate IS organization and governance system 10. 10.Ensuring regular performance measurement I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Page 590-591

17. © 2005 Pearson Prentice-Hall Chapter 15 - 17 IS organization: Role is continually changing Needs a mission statement Must be future-oriented while fulfilling today’s requirements Must be aligned closely with business activities 1. Agreeing Upon the Role of the IS Organization Page 588-590 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

18. © 2005 Pearson Prentice-Hall Chapter 15 - 18 IS organization is expected to: Demonstrate business understanding and maintain close communication with business managers Respond quickly to changing business needs Help reengineer business processes to be more customer responsive Ensure business can participate in e-commerce Keep final customer in mind Build systems that provide direct customer benefit Help business managers make better decisions with information Use IT for competitive advantage Help business integrate IT 1. Agreeing Upon the Role of the IS Organization I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Page 591

19. © 2005 Pearson Prentice-Hall Chapter 15 - 19 IS organization is also expected to: Be steward of organization’s IT resources Deploy IT resources throughout the organization Facilitate productive use of resources Lead development of information vision and IT architecture Communicate vision and architecture Maintain managerial control over important information resources Administer corporate data Make current and new IT available at lowest possible cost Help business managers know and use technology Develop partnership with business managers to exploit technology 1. Agreeing Upon the Role of the IS Organization Page 592 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

20. © 2005 Pearson Prentice-Hall Chapter 15 - 20 Chief Information Officer (CIO): A member of executive management team Needs mix of business and technical knowledge Guides and unifies entire organization’s IT resources Masters understanding of business, products, vendors, sales channels, customers, and competition Recognize IT advantages and where to apply Hires good people and delegates Works with executive management team to achieve competitive advantage 2. Selecting Effective IS Leadership Page 593-594 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

21. © 2005 Pearson Prentice-Hall Chapter 15 - 21 Senior IS Management Issues: Improving data and IT planning, especially linking IS to the business Gaining business value through IT Facilitating organizational learning about and through IT Refining the IS unit’s role and position Guiding systems development by business managers Managing organizational data as an asset Measuring IS effectiveness Integrating information technologies Developing systems personnel 2. Selecting Effective IS Leadership Page 594-595 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

22. © 2005 Pearson Prentice-Hall Chapter 15 - 22 3. Creating an Active Partnership with Business Managers Page 595 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Partnership – a critical strategy based on sustaining a long-term relationship between IS and business management

23. © 2005 Pearson Prentice-Hall Chapter 15 - 23 IS steering committee or advisory board used to: Ensure frequent interaction Set priorities Check progress Allocate scarce resources Communicate concerns Provide education Develop shared responsibility 3. Creating an Active Partnership with Business Managers Page 595 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

24. © 2005 Pearson Prentice-Hall Chapter 15 - 24 4. Determining an Outsourcing Strategy Page 595 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Outsourcing – hired outside services to perform some of a company’s IS operations Application service providers (ASPs) – provide total systems to organizations, ranging from competitive intelligence systems to broad ERP applications

25. © 2005 Pearson Prentice-Hall Chapter 15 - 25 Outsourcing: Allows an organization to pay only for what it uses Trend might relate to the position of the CIO Popular, largely due to:   Fast pace of technological change   Dissatisfaction and costs related to past in-house services Must be both a remedy for service failures or costs and a strategic choice Should not be used for strategic information systems with security or privacy issues Page 596-597 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

26. © 2005 Pearson Prentice-Hall Chapter 15 - 26 Key factors in selecting an outsourcing vendor: Vendor reputation Quality of service Flexible pricing Page 596-597 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES

27. © 2005 Pearson Prentice-Hall Chapter 15 - 27 5. Designing an Equitable Financing System Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Typical measures used to track IT costs:   Total IT budget as percentage of total organization revenues or income   Total IT budget as percentage of total organization budget   IS personnel costs as percentage of total organization professional personnel salaries and wages   Ratio of hardware and software costs to IS personnel costs   Costs for IT hardware and software per managerial or knowledge worker

28. © 2005 Pearson Prentice-Hall Chapter 15 - 28 5. Designing an Equitable Financing System Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Why is it hard to measure IT costs?   Some IT costs are hidden   No relationship to benefits included in these measures   Benefits may happen after development costs occur

29. © 2005 Pearson Prentice-Hall Chapter 15 - 29 Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Measuring Benefits No simple way to measure value added benefits of IT Can track IS performance measures over time

30. © 2005 Pearson Prentice-Hall Chapter 15 - 30 Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Controlling IS Costs Use IS organization’s budget Divide costs:   Personnel   Equipment and software   Outside services   Overhead

31. © 2005 Pearson Prentice-Hall Chapter 15 - 31 Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Chargeback Systems IS chargeback process – places control of IS spending with business managers, and is used to better understand true costs

32. © 2005 Pearson Prentice-Hall Chapter 15 - 32 5. Designing an Equitable Financing System Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Why use a chargeback system?   Assign costs to those who consume   Control wasteful use of IT resources   Overcome belief that IT costs unnecessarily high   Provide incentives using subsidy   Change IS to be more business driven   Encourage managers to be knowledgeable consumers

33. © 2005 Pearson Prentice-Hall Chapter 15 - 33 5. Designing an Equitable Financing System Page 598 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Successful chargeback systems must be:   Understandable   Timely   Controllable   Accountable   Clearly linked to benefits   Consistent with IS and organizational goals

34. © 2005 Pearson Prentice-Hall Chapter 15 - 34 6. Deploying Global Information Systems Page 600-601 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Region and country issues influencing global IT management: 1. 1.Country telecommunications infrastructures 2. 2.Legal and security considerations 3. 3.Language and culture 4. 4.Time zone differences

35. © 2005 Pearson Prentice-Hall Chapter 15 - 35 6. Deploying Global Information Systems Page 602 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Key trends of global outsourcing: Offshore development centers – permanent offshore presence Near-shore sourcing – outsourcing to countries close to home and overlapping time zones Multisourcing – relying on multiple service providers in a number of companies, based on price and skills

36. © 2005 Pearson Prentice-Hall Chapter 15 - 36 6. Deploying Global Information Systems Page 603 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Global team manager traits:   Multiculturalist   E-facilitator   Recognition promoter   Internationalist   Traveler

37. © 2005 Pearson Prentice-Hall Chapter 15 - 37 7. 7.Designing an Appropriate IS Organization and Governance System Page 603-604 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Figure 15.8 Classic IS Organization Structure

38. © 2005 Pearson Prentice-Hall Chapter 15 - 38 7. 7.Designing an Appropriate IS Organization and Governance System Page 604 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Types of IS Organizational Design:   Centralized – IS applications and resources housed, managed, and controlled centrally   Decentralized – business units have complete control of their own IS resources   Federal – attempt to achieve benefits of both centralized and decentralized   Customized – mixed design in large enterprises where each division determines best design for that division

39. © 2005 Pearson Prentice-Hall Chapter 15 - 39 Page 605 Figure 15.9 Common Designs for the IS Organization Centralized Decentralized Federal Customized

40. © 2005 Pearson Prentice-Hall Chapter 15 - 40 7. 7.Designing an Appropriate IS Organization and Governance System Page 605 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Organization design depends on:   How rest of business is organized   Type of customer markets, products, and geographical spread   Role of IT within the organization   Reporting level of most senior IS leader   Types of technologies managed by IS organization

41. © 2005 Pearson Prentice-Hall Chapter 15 - 41 Page 606 Figure 15.10 Four Types of IS Governance Mechanisms

42. © 2005 Pearson Prentice-Hall Chapter 15 - 42 8. Ensuring Regular Performance Measurement Page 606 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Necessary for internal customers to regularly evaluate IS organization Need to show if promised cost savings are realized Required:   Agreement on measurable criteria   Metrics to judge work quality

43. © 2005 Pearson Prentice-Hall Chapter 15 - 43 8. Ensuring Regular Performance Measurement Page 607 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES IS Evaluation Criteria   Meeting business objectives   Responding rapidly and economically to new needs   Expanding business or services   Developing an architecture and plan   Operating reliable and efficient technology resources   Focusing on the customer   Providing quality IS staff   Reducing size of backlog   Satisfying users   Adopting new technologies Figure 15.11 IS Evaluation Criteria

44. © 2005 Pearson Prentice-Hall Chapter 15 - 44 8. Ensuring Regular Performance Measurement Page 608 I NFORMATION T ECHNOLOGY M ANAGEMENT S YSTEM I SSUES Other measures to evaluate IS performance:   Service level agreements with internal business units can be used to evaluate IS performance   Annual surveys for each major system   User satisfaction surveys