Management of the IT Function & Organizational Impacts

1. Management of the IT Function&Organizational Impacts

2. IT Dept Responsibilities • System development • Infrastructure Maintenance • Data/Storage Mgt • Application Mgt (OS, Enterprise, other ISs) • Hardware Asset Mgt • Networking • Basic & Advanced (collab, mobile, Web…) • Computer Center operations and other facilities • Support • Training, Help desk/Information Center • Planning & control • IRM strategizing and planning • Security, Continuity • Standards & Policy making/enforcement • Project Management

3. Managing the IT Dept • Issues • IT function operations • Development Strategies • IT vs. End-User control • How (Buy, build, reuse), Who • Maintenance Strategies • Infrastructure, 5 R’s and Vendor issues • IRM planning (strategic, tactical, project) • Funding issues - Who pays for IT? • Structure of IT (reporting, division of labor) • Where put IT? • What type of employee? • Human Resource Issues • Reputation/Impression Management

4. Infrastructure Issues • Levels of Infrastructure • Public (Phone, Internet, Industry) • Inter-organizational (SCM, JPD) • Enterprise-Wide(ex: Email, Intranet, ERP) • Business Units and HQ • Specialized infrastructures (or past history) • Software issues • License vs. Buying copies • Single copies vs. Site license (unlimited copying) • Network licenses (‘seats’) • Hardware - lease vs. buy • Both: Acquisition, Installation, Support (TOC)

5. Security and Control • Risk assessment and preventions • Attacks - firewall to malware & vandalism • Failures - fault tolerant, redundancy • Security policy • Legal requirements, orgal req • Controls - • access control, encrypt • monitor/detect, train • Integrity Controls • Data validation, process auditing, logs • Continuity • Disaster planning/procedures • Recovery procedures

6. IRM Planning (strategic) • IT can be strategic in three ways • Improve internal operations • Allow the firm to improve its position in the market • Allow the firm to improve its relationships in the supply chain or with other partners • BUT best way to achieve adv is… • thru Strategic Alignment and • thru People + IT

7. Strategic Alignment fit? Assement of the Business Assessment of IS Architecture Id current Problems (1) (1) link Where Going Business Vision (2) (3) IT Vision link Determine new IT Architecture What Needed (4) link Business Strategic Plan (5) link Project Portfolio IT Strategic Plan (6) link Business Operational Plan Budget Schedules Objectives (7) link IT Operational Plan (8)

8. Who pays for IT services? • Overhead method • take total cost of IT • divide evenly across depts • Chargeback • bill dept for cost of each service • IS Function as Profit Center

9. Structure of IT function • Typical departments • Operations, Development, Support • May have depts for each function (ex: Acct IS) • Networking is either separate or within each • Management • Director of each department • Chief Information Officer • IT or Business person? • End-User Role • Strategic Planning committee (top mgt) • Steering Committee (middle mgt) • Centralized, Decentralized or Hybrid • Continuum: in-house vs out-source

10. Structure of IT • Centralized IT • Most IT folks in one area • Decentralized IT • IT folks in each sub-unit • Distributed (hybrid) • Each dept has some IT people or… • HQ & divisions/subsidiaries • Who does what?

11. Outsource • Which functions? • Maintenance of hardware • Data Entry • Transaction processing • Software Development or design • Networks • design • maintenance • Management • Issues • Agency costs • Vendor Relationship Issues • Vendor Management • Service Level Agreements • Issues when switching (lock-in)

12. Insourcing • Definition - vendor employees work in your org • Options • Facilities management • Side by side • Pros • Greater control over IT function • Security of information • Reliable availability / stability • Company culture buy-in • Trust among IT dept and other employees

13. Insourcing - Cons • Too much organizational control • Overwhelming responsibilities • Work for 2 bosses • Work + sales • Company culture buy-in • ‘Going Native’ • Higher overhead costs • Difficulty maintaining excellence of knowledge & experience

14. Insourcing - Cons • Too much organizational control • ‘going native’ • Overwhelming responsibilities • Higher overhead costs • Two bosses • Resentment from in-house employees

15. Determinants of Insourcing • Is the IT department central to the core business and strategy? • Could IT become a source of competitive advantage? • Are IT needs complex and relatively unique or dynamic? • Is current IT function satisfactory?

16. Evaluation of Vendors • Deciding which functions to outsource • Facilities, Development, Maintenance • Infrastructure • Hardware/software • Which aspect of function (service)? • Selecting Systems/Vendors • Request for Proposal • Evaluate & Choose frm vendor responses • Quality/Reliability issues • User groups • History - recommendatons • Negotiate Contract

17. Evaluation Criteria Issues • Hardware • What are some? • Ergonomics may be an issue • Software • What are some? • Licenses vs. single copy prices • Open vs. proprietary • Version cycle

18. Human Resource Issues • Recruitment • Is there a shortage or not? • Alternative sources of IT people • Educational Institutions • Certifications • H1B Visas, outsourcing • Retention • What motivates an IT person? • Promotion • How reward people that aren’t mgt material? • Retraining • Dealing with constant changes in: • hardware, programming languages, methodologies

19. CIO Magazine survey of 495 respondents. Top IT spending priorities: Integrating systems and processes 36% Implementing new technologies such as wireless 26% Staff retention/hiring/training 25% External customer service relationship Management 24% Lowering costs/meeting budgets 22% Enabling/enhancing e-commerce 21% Project management improvement 18% Strategic planning/aligning IS and business goals 14% Implementing data security and privacy 14% Previous Experience on Path to CIO: IT 82% Consulting 50% Administration 34% Customer service 34% Sales 30% Research and Development 27% Finance 25% Engineering 25% Marketing 24% Manufacturing/Production 18% Other 38% How a CIO spends their time: Communicating with other business executives 33% Managing IT staff 28% Interacting with outside business Customers/partners/suppliers 15% Understanding technologies 15% Talking to IT vendors 11% Recommended reading list: (From Tom Pike): 1.Writing Style Manuals 2. How to Speak How to Listen by Mortimer J. Adler 3. Strategy Pure & Simple by Michel Robert 4. The Essential Buffett by Bill Miller 5. The Witch Doctors – Making Sense of the Management Gurus by Micklethwait and Wooldridge 6. Dangerous Company – The Consulting Powerhouses & the BusinessesThey Save/Ruin by James O’Shea and Charles Madigan 7. The Day The Universe Changed by James Burke 8. Connections by James Burke 9. Rethink, Retool, Results by Tom Pike 10. Information Renaissance by Tom Pike 11. Smart Way to Buy Information Technology by Brad L. Peterson & Diane M. Carco The personal skills most important for CIO: Effective communication 70% Understanding of business processes and Operations 58% Strategic thinking and planning 46% Thorough knowledge of technology options 31% Negotiation skills 19% Ability to influence/salesmanship 17% Technical proficiency 10%

20. Project Management • Manage constraints • Scope • Time • Cost • Quality (TQM, Six Sigma) • Risks • Facilitate project • Manage processes • Initiate, Plan, Control, Execute, Close • Communications mgt • Procurement

21. Initiate Close Process Group Relationships Plan adjust due to elaboration Control update adjust to stay on track Execute

22. Maturity levels (stages) Continuously Improving Optimizing Predictable Managed Standard, consistent Defined Disciplined Process Repeatable Initial

23. Definition of a Maturity Model • Maturity – the state or quality of being fully grown or developed ChaoticMature • Conceptual Framework • Based on Industry Best Practice • Offers organizations an opportunity • Id areas for process improvement • Maturity models typically have 4-5 stages • Models have been created for many processes • Ex: Project mgt, chg mgt, software dev (CMM) • CMM = Capability of software dev group

24. Comparison

25. CMM Stats as of April 2003 What level are firms? How long does it take to move up? CMM 1-16.9% CMM 2-43.2% CMM 3-24.6% CMM 4-8.0% CMM 5-7.3% 1 to 2: 22 months 2 to 3: 21 months 3 to 4: 25 months 4 to 5: 15 months Level 5 organizations include NASA, Onboard shuttle group, Boeing Defense & Space Group and IBM Federal Systems Major goal for Indian outsourcing firms

26. Organizational Impacts Flexibility Alignment

27. Organizational Flexibility • Defined - • how quickly/radically can change when needed • incremental vs. revolutionary change • awareness of and adaptation to environment • threats/opportunities • Different forms of orgal flexibility • Decision making flexibility • Structural flexibility • Product/Market flexibility • Process flexibility

28. Decision Making Flexibility • Ability to change • who makes decision, how make it • Traditional Decision-making • Top-Down decisions codified into rules • Exceptions reported upwards • Is this flexible? • Impact of IT on decision making • TPS - formalizes rules into IT • DSS/ES - formalizes decision process • Networking - improves communication, coordination • KMS - distributes knowledge • Does IT increase decision making flexibility?

29. Structural Flexibility • What is structure? • Division of Labor • Reporting Mechanisms = org chart • Linking Mechanisms = committees, task forces • Orgal Boundary = workers inside or out? • Employees vs. contract workers vs. agents • Interorganizational relations • transactional, collaborative, engulf • What is a flexible structure? • When need a flexible structure? • Can IT influence structural flexibility?

30. Product and Process Flexibility • Product Flexibility • How can IT improve ability to • modify products created • create new products • find new markets • Process Flexibility • Can IT make it easier to change business processes? • Can IT become an obstacle?

31. Downsizing and Empowerment • IT can be used to replace workers • Especially if information conduits • IT can increase span of control • More effective tracking/reporting • IT can be used to empower workers • Act like experts • Decision support • When downsizing can use systems to empower those who are left

32. Organizational Alignment and IT • What is organizational alignment? • Organizational change • misalignments lead to changes • ripple effects of change • changes cause realignments • changes cause new misalignments • stability, incremental change, revolutionary change • IT and alignment • Key issue in organizations: how to keep IT aligned with business

33. Motor Vehicles Case - alignment • Natl govt shift to business practices (macro-env) • Hired new Director (dominant coalition) • Changed mission (strategy) • Current ops • 138 registries + 1 office admin + Regional dirs • Lack customer service (culture) • Many diff lines, have to wait in each one • If there was a problem had to go to admin • Weeks to process (police couldn’t enforce) • Corruption (driver sch bribes, selling phony licenses • OII (macro-tech) • 2 IBM Mainframes, 14 yr old apps, regular failures • Undocumented 2nd Gen lang, very patched • Each query needed specialized programmer to do it

34. Changes at DMV • Department • Reduced number of regions (structure) • Each registry given authority (org design) • Hired mgrs who could handle it (middle mgt) • Reduced job classifications (jobs) • Cust serv I & II, supervisor, mgr • Result - clerk as helper (role) • Problem -- old system isn’t flexible (macro-tech) • New OII • Single integrated network • Open systems (Unix) - Easy to add onto • New application • Registries now do licensing (micro tech) • But it is easy to audit, catch unusual patterns (macro tech) • Future - interorgal systems • Mall registry, link to weigh stns, dealers