Dr. Amit Mehra

1. Being a technology consultant to the CEO Dr. Amit Mehra Assistant Professor of Information Systems Indian School of Business Hyderabad, INDIA Email: amit_mehra@isb.edu Ph: 91-40-23187152

2. What are the functions of the IT organization today?

3. What are the functions of the IT organization today?

4. PART I: Getting PART 1 Driving innovation through better information using IT

5. Getting better information using IT Our focus

6. From the Cathedral to the Bazaar

7. Learning Objectives

8. Introduction http://www.youtube.com/watch?v=9_MXvopRqps&NR=1

9. Examples of Prediction Markets

10. Examples of Prediction Markets

11. How can prediction markets be used in business? • http://www.youtube.com/watch?v=3BJqAHGjtsI&feature=related • An example (Bestbuy): http://www.youtube.com/watch?v=keVL0PkCpaQ&NR=1

12. Why do they work?Estimating a state

13. DESIGN ISSUES AND BEST PRACTICES

14. Design of prediction markets?

15. Issues with Corporate Prediction Markets

16. Known Issues with Corporate Prediction Markets

17. Summary -- Prediction Markets

18. PART 2 Using innovation to create value from IT: How to get there?

19. The path to IT value New thinking New Business Value Show value for money

20. New thinking IT is cost of doing business

21. New thinking IT is cost of doing business Best avoided, positions IT as a pure utility!

22. New thinking Purpose of the IT function is to deliver great technology to the enterprise

23. New thinking Purpose of the IT function is to delivery great technology to the enterprise How would you measure the value of an exercise machine?

24. New thinking Nothing is perfect, especially something as complex as IT

25. New thinking Nothing is perfect, especially something as complex as IT They fail too often, we can’t trust them!

26. New thinking Rules must be enforced rigidly

27. New thinking Rules must be enforced rigidly Have you communicated why?

28. New thinking The business is IT’s customer and the customer is always right

29. New thinking The business is IT’s customer and the customer is always right • Shapes the thinking that IT is not part of business • Complex and brittle legacy environments • Demand exceeds supply • Does not mean enforcing rules without cause being clear

30. Show value for money The IT organization is providing the Right services At right level of quality At competitive price The rest of the business knows this

31. How to show value for money? Measure and communicate IT performance in a way that the rest of the business understands Benchmark IT performance against peers Provide data that will help the enterprise manage consumption of IT services

32. Measure and communicate IT value Unit cost and service quality of every service

33. Measure and communicate IT value Unit cost and service quality of every service e.g. E-mail: cost per mailbox availability message delivery time spam percentage

34. Measure and communicate IT value Unit cost and service quality of every service e.g. Infrastructure services: cost per second availability of contract sales application time per transaction

35. Benchmark: never, ever discuss cost apart from quality

36. Help the enterprise use IT well Smart consumption e.g. chargeback reports show unit costs and usage of service, Each service is marked with an index that captures how much can the user control costs (e.g. printing) Be very proactive in showing IT effort to cut costs for services that users do not control directly

37. Positioning IT as an investment in business performance

38. Needs identification Which business outcomes matter the most?

39. Needs Identification Clarify the firm’s current strategy Analyze business processes What are key operational metrics? How?

40. How IT improves business performance? Improve decision making Improve process Internal External Scope of change

41. Selecting IT investments Figure out costs, benefits and risks for different investment types: Run the business Grow the business Transform the business • Risk is increasing from top to bottom • Benefits may be measured in financial or operational terms • May have to use operational metrics more from top to • bottom

42. Have a predefined model to select investmentse.g. Intel’s BVIT IT efficiency = An index for enhancement of IT infrastructure Business Value = An index for the project’s impact on Intel’s strategy and priorities Financial Value = Index for investment cost- benefit (bubble size)

43. Getting the best value from IT investments Business Process Redesign, Application development and organizational change management

44. Should you measure value created, or is it too difficult and risky? If you don’t measure value, someone else will take credit for it!

45. Should you measure value created, or is it too difficult and risky? Does an IT budget at 4% of revenue look good, when the industry benchmark is 2%?

46. How to measure value? Best time is when project is approved and before it is provisioned Clearly decide which financial and operational metrics are in focus Baseline these numbers Set up a machinery for post-implementation review process

47. To summarize… http://www.youtube.com/watch?v=bBB9lRnx1v0

48. Finding IT gets new opportunities: Prediction Markets Improve decision making Improve process Internal External Scope of change

49. Appendixadditional rationale, design theory etc.

50. What are Prediction Markets? • Means of • Aggregating and Disseminating Information • Prediction markets can be used when the following exist/ can be put in place: • Incentives to seek distributed information • And not personal opinion => Do you like this movie? vs. Do you think this movie will be liked by majority moviegoers? • Incentives for truthful information revelation • Why should people make an effort to give you any information? • An algorithm for aggregating diverse opinions • How to aggregate the information collected from people?