IT Fundamentals or How to sound IT literate

1. IT Fundamentals or How to sound IT literate Optional Class: ISM

2. Questions for the session • A Basic Historical Perspective on IT • What are the basic IT systems in organizations today? How are they organized? • What are the principal IT technical capabilities you need to consider? • How to talk with IT vendors? Optional Class: ISM

3. IT History: The Three Waves of Computing From “A Nation Transformed by Information”, Chandler and Cortada Optional Class: ISM

4. The Three Waves of Computing Network Era DP Era PC Era Mainframes Client/Server PCs LAN, WAN Mainframes PCs Client/Server Hardware Mainframes Off-the-shelf User friendly ML AL Fortran Cobol Open Standards Integration Software Outsourced? Centralized Embedded The IS function Extended enterprise Payroll Accounting Back-office Some managers Everybody in office The users Optional Class: ISM

5. Underlying technologies, vendors ? Optional Class: ISM

6. Three Layers of IT 5-yr sales trend forecasting, profitability analysis, KPI tracking, OLAP, etc Top Management Knowledge level Mainly KNETS e-calendars, product design systems, customer analytics systems, portals, OLAP, etc Knowledge level order processing, order tracking, payroll, accounts payable, etc Mainly PETs Operational level Hardware Systems Software wires, PCs, servers, windows XP, etc Infrastructure level Optional Class: ISM

7. 1 Gbps Fibre-optic link • 100 mbps link to offices • Network routers • 1 Gbps Fibre-optic link • 100 mbps link to offices • Network routers Case in point: INSEAD’s Info Systems Examples • Business Intelligence • Business Objects “Top Management” level • KM/Collaboration • Centra Knowledge level • Operations • MBA • EDP • Finance, Payroll Operational level Fontainebleau Singapore • 2 mbps data/voice/video link Optional Class: ISM

8. INSEAD’s underlying technologies In-class voting tools (?) Interactive Q&A tools (?) Optional Class: ISM

9. Technologies matter in what organizations can (or cannot) do… “Why does it take so long?”typical CEO question about IT • Knowing your organization: • Unisys CEO (year 1997): “What is our biggest customer?” • Unisys CFO (after 2 weeks of work): “It is X… who is this by the way?” • In 1999, HP divested of Agilent • However, because the HR systems could not be “separated” easily, a significant proportion of Agilent’s workforce were carried on HP’s books for the next two years • Significant legal and financial liability • In 2001, a large European bank delayed releasing web-based product on time due to infrastructure limitations • Lost market share to competitors in three countries • Estimated $1 billion cumulative loss of revenue • “Why can’t you check your INSEAD email through your mobile?” – INSEAD IT committee meeting, May 2004 Optional Class: ISM

10. Five Key Technical Capabilities • Reliability • Key question: what is the impact of downtime? • Challenges: failures (hardware/software), security, intrusions • Scale/Scalability • Key question: what is the likely growth in computing demands and information intensity? • Challenges: periodic spurts in activities, future growth • Flexibility • Key questions: What is the organization’s and/or industry’s clock speed? How fast are our organization and the environment changing? • Challenges: Changes of process, introduction of new IT supporting products, changing environment • Integration • Key questions: Challenges of mergers? what are the opportunities for cross selling? Assimilation of new technologies? • Challenges: integration across applications, incorporating new systems • Renewal of technology • Key questions: How costly will the future upgrades be? How often do we have to upgrade? How easy is it to switch vendors? • Challenges: future upgrades, migrating to different software or new versions of the same software; change management Optional Class: ISM

11. Vendor Characteristics • Functionality • Technical fit • Execution ability and experience • People and cultural fit • Trustworthiness • Change Management • Financial strength • Number of integration partners and subcontractors • Total Cost buyer beware of low cost bidder… Optional Class: ISM

12. Vendor Selection Vendor search time and contracting (can be up to $500K… or 3%... But don’t skimp here) • Focus on business benefits, not on IT features • Specify the required functionality (how much detail you need?) • Be aware of extreme “ROIs” or no “ROIs” • Ask for or get references • Get outside help (consultant) • Mandate a implementation project plan if appropriate • Specify the minimum skill level and amount of staff if appropriate • Create a warranty that the vendor will address changes to the software as time goes on – consider flexibility of contract • Relationship management throughout (see class 3) • Detail a dispute resolution process, escalation procedures and penalties for performance issues • Verify vendor will “stick around” (e.g. check financial viability) • Be aware of vendor “hold up” costs Optional Class: ISM

13. Key Lessons • Key technical capabilities to discuss about with your IT people and vendor: • Reliability • Scalability • Flexibility • Integration • Technology renewal • The three IT layers and some basic IT systems: • Infrastructure IT • Applications IT: Operational (PETs), Knowledge and top management level (KNETs) • Vendor negotiations: • A lot hidden under the hood • Focus on business benefits and vendor (long term) relation • Ignore technology jargon and over-hyped ROI and promises Optional Class: ISM