2-1 The Top IS Job Lecture 6. Today lecture Summary Traditional Functions Are Being Nibbled Away...

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The Top IS Job

Lecture 6

Today lecture Summary

Traditional Functions Are Being Nibbled Away Roles Toward IS Lite The CIO’s Responsibilities Four Aspects of the CIO role

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• IT has become an essential piece of business strategy

• Not keeping up in IT may even mean going out of business

• The job has become too large for one group

• While the growing importance of IT is causing the IS Department’s work to expand into new areas of responsibility, management is realizing that the traditional and more operational portions of the job do not have to be performed by the IS department

– Particularly ‘centralized’

Traditional Functions Are Being Nibbled Away

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• The traditional set of responsibilities for IS has included:

1. Managing operations of data centers, remote systems, and networks

2. Managing corporate data

3. Performing systems analysis and design, and constructing new systems

4. Systems planning

5. Identifying opportunities for new systems

Traditional Functions Are Being Nibbled Away cont.

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• The traditional functions still need to be performed but the following trends are moving their performance out of the IS department and into other parts of the organization or to other enterprises:

1. Distributed systems

– Software applications migrating to user areas

2. Ever more knowledgeable users have taken on increased IS responsibilities

Traditional Functions Are Being Nibbled Away (Figure 2-2)

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3. Better application packages

– Less need for ‘armies’ of programmers, analysts etc.

4. Outsourcing

Traditional Functions Are Being Nibbled Away (Figure 2-2)

conti…

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• (Another way to look at it:) IS is not a single monolithic organization, but rather a cluster of four functions (Fig. 2-3):

1. Run operations

2. Develop systems

3. Develop architecture

4. Identify business requirements

New Roles are Emerging

New Roles are Emerging conti..

• The ‘Squeeze’ on Traditional IS Activities (Figure 2-4):

– Growing External Services

– Growing Capabilities of Users

• ‘Future’ Roles for IS (Figure 2-5):

– Broker

– Systems and Information Architecture

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• IS started ‘centralised’ and evolved into a ‘federal model’:

– Some things (standards, operations) = centralised

– Others (application development) = dispersed locally to best meet local needs

•To make the federal model work better, companies are shifting attention from roles to processes

Toward IS Lite

(another ‘view’)

Toward IS Lite(another ‘view’)

• The IS department can be viewed as managing three overall processes (Figure 2-6):

– Driving innovation

– Managing change

– Supporting infrastructure

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• Johnson and Johnson subsidiary

• New CIO = agenda to align the department with the business

• Focussed on execution and measurement to gain credibility with the business units

• Strong project management and not allow scope creep

– Emphasis on staff with these skills

LifeScan

Case example: The ‘Federal’ Model

LifeScan..

• Uses Johnson and Johnson Group ‘stuff’ combined with local (LifeScan) ‘culture’

• Centralization of policies, procedures etc.

• Local implementation with all projects business led

– Moves ownership of systems to the business people

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The CIO’s Responsibilities In line with the evolution of IS departments, the

emphasis of the top job has changed 86 = Infrastructure 89 = helping formulate corporate policy 92 = IT as a catalyst for revamping the way

enterprises worked 98 = revamp business operations using IT continued

with the Internet (customers +) 02 = the ‘technical member’ of top management 04 = a cost and risk based approach Vs. “let’s get

into e-commerce fast…”

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The CIO’s Responsibilities

Today the cost emphasis remains Outsourcing continues to grow (amid controversy) CIOs are expected to do much more with not much

more $$

Also = under pressure: To implement protective measures New financial reporting e.g. Sarbanes Oxley Keep the IT innovations coming!!

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CIO Responsibilities — History

CIO Responsibilities — History cont.

The Mainframe Era Predominated 1960s – early ’80s Role of DP / IS Manager = operational manager of a

specialist function

Distributed Era End of ’70s as PCs became commonplace LANS and WANS linking computers Took on 4 more roles:

Organizational Designer Technology Advisor Technology Architect Informed Buyer

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CIO Responsibilities — History cont.

The Web Era Started in the mid-1990s for some Arose from the emergence of the Internet, and esp.

the Web as a business tool Era is still in its ‘infancy’ but add to the CIO’s ‘job’

the role of business visionary

Relationship between CEO and CIO vary along a wide spectrum

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Four Aspects of the CIO role

1. Leading: Creating a vision by understanding the business

2. Governing: Establishing an IS Governance structure

3. Investing: Shaping the IT portfolio

4. Managing: Fostering change

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There are seven approaches CIOs are using to understand the business and its environment:

1. Encourage project teams to study the marketplace

2. Concentrate on lines of business

3. Sponsor weekly briefings

1. Leading: Creating a Vision by Understanding the Business

1. Leading: Creating a Vision by Understanding the Business…

4. Attend industry meetings with line executives

5. Read industry publications

6. Hold informal listening sessions

7. Become a “partner” with a line executive

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• Gather the following information about the company and its industry:

– Current industry environment

– Business goals and objectives

– Major practices of competitors

– Pertinent government regulations

– The inputs, outputs, and resources of the firm

1.A Understand the Business:

Encourage Project Teams to Study the Marketplace

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• It is recommended to ask the following questions about each line of business:

1. Are we organized to serve that line of business?

2. Do we have an account manager in IS who has responsibility for that line of business?

3. Do we have someone within that line of business who oversees IT activity and talks the business language?

1.B Understand the Business:

Concentrate on Lines of Business

1.B Understand the Business:Concentrate on Lines of Business

4. Do we have a sponsor in the line of business?

5. Do we have the attention of their management?

6. Does the line of business offer an opportunity to use systems in new ways?

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• To understand the business, one needs to understand the marketplace

• By sponsoring short presentations by the people closest to a business, IS management can help fix the problem of employees not being given exposure to the marketplace without cutting into working time too greatly

1.C Understand the Business:

Sponsor Weekly Briefings

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• Attending meetings with a line executive can be even more enlightening because he or she can explain what the company is or is not doing in areas discussed by the speakers

• It is also likely to foster new friendships

1.D Understand the Business:

Attend Industry Meetings with Line Executives

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1.E Understand the Business:

Read Industry Publications

• News publications provide information on new products, current issues, company changes, and so on

• They provide better analyses of industry trends, discussions of ongoing research, and projections about the future

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1.F Understand the Business:

Hold Informal Listening Sessions

• Employees learn a lot by listening to each other’s needs

• Meetings are held in a setting that is not charged with tension, participation is voluntary, and their purpose is to “just chat”

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1.G Understand the Business:

Partner with a Line Executive

• The Society for Information Management presents an award each year to honor an IS executive business team who have achieved significant business results through their alliance

• It reinforces partnering which is needed to successfully guide and deploy IT today

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• UNDERSTAND THE BUSINESS

• TALK TO PEOPLE

THE ‘KEY’

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1.2 Leading: Creating a Vision of the Future and Selling It

• IS executives are no longer reactive, providing only support

• They manage some of the most important tools for influencing the firm’s future

• They are becoming more “proactive” by helping to create a vision of the firm’s future and its use of IT and selling those ideas to others

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1.2 Leading: Creating a Vision of the Future and Selling It:

What is a Vision?

• It is a statement of how someone wants the future to be or believes it will be

• “We will put a man on the moon and return him safely to earth, by the end of the decade” – JFK, early 1960s


• Beath and Ives present several corporate visions, e.g.:

– Otis Elevator

• “Any salesperson can completely order an elevator in a day”

– Rittenhouse Homes

• “Customers can get a house designed and built from a retail store”

• Once a vision is in hand, then a strategy can be formulated on how to bring the vision into being

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Why develop a Vision?

• A vision of a desirable future can provide stability when it sets a direction for an organization

– Today most corporate visions have an IT underpinning – leveraging the Internet for business purposes

– That vision sets their direction

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• Main activities = exploration and production of crude oil and natural gas

• The Business is in the Business Units

– 150 business units in 100 countries

Each have their own balance sheet and performance contract

– HQ must convince the business units of the wisdom of BP-wide practices

– Overarching this distribution of power is a set of group-wide policies based on shared core values

BP

Case example: Leading - Vision

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• Digital Business (DB) Underpins Transformation

– 1999 = rare companywide mandate for a common operating environment (COE)

– Early 2000 = formed Digital Business

Moved IT out of the beleaguered role of technology provider into a strategy-creation role

BP

Case example: Leading – Vision cont.

BP

Delivered overarching strategy, enterprise infrastructure and projects and standards while supporting differentiated service offerings driven by the business streams

• DB Strategy and Chief of Staff

• DB Chief Technology Office

• DB Projects

• DB Operations

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• Living on the Web

– Moving processes and systems to the Web and simplifying both at the same time

• Socializing Technical Directions

– Socialize the idea of a new common good to the point where people accept it

– Technical choices are now made through business-based networks of experts

BP

Case example: Leading – Vision cont.

BP

• Going Forward: Foster Learning and Focus on Explanation

– Major challenge = fostering learning

– Real leverage comes from the new value a new system opens up

– Bright people have been attracted to DB because it is involved in the most important conversion: where BP is going digitally

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• A champion is someone with a vision who gets it implemented by obtaining the funding, pushing the project over hurdles, putting his or her reputation on the line, and taking the risk of the project


Encouraging Champions of IT Projects

Leading

• The first step in encouraging champions is to find them (they can’t be ‘appointed’!)

– They are opinion leaders, and they have a reputation for creative ideas or being involved with innovations

– They have developed strong ties to others in their organization, and they command respect within the firm

– They have the organizational power to get strategic innovations implemented

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Information systems champions need three things from IS Management:

1. They Need Information:

• Champions need information, facts, and expertise for persuading others that the technology will work

• Information systems people can help them find the information they are lacking

1. Leading: Creating a Vision of the Future and Selling It:

Encouraging Champions of IT Projects cont.

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2. They Need Resources:

• Giving champions “free” staff time is especially helpful during the evaluation and persuading portions of a project

• Champions are likely to need material resources, such as hardware and software

3. They Need Support:

• Champions need people who approve of what they are doing and give legitimacy to their projects

1. Leading: Creating a Vision of the Future and Selling It:

Encouraging Champions of IT Projects cont.

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• Financial services company (employee benefit and pension programs)

• Much of their IT work is decentralised, therefore the ‘Corporate Admn. Department’ focuses on 3 functions they call:

– Plan

– Build

– Run

Aetna Life and Casualty

Case example: ‘Champions’

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• They seek out ‘Business Champions’ who think a technology might solve their business problem(s)

• Extensive use of:

– Pilot Projects

– Steering Committees

• Challenges; especially making a future technology credible to people today has been one hurdle

Aetna Life and Casualty

Case example: ‘Champions’ cont.

2. Governing:Establishing an IS Governance Structure

The term ‘Governance’ has become prominent in all areas of business including IT.

IT Governance

“The assignment of decision rights and the accountability framework to encourage desirable behavior in the use of IT”

Governance differs from management in that

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Governance is about deciding who makes decisions whereas

Management is about making decisions once decision rights have been assigned

Numerous business scandals (U.S. – Enron, Global Crossing etc.; Australia – HIH) have prompted the increased interest in this area

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cont. ‘Governance’ has become more important in the IS

world because IT expenditures have become so large and diverse that management has had to find a way to bring order to all the decision making

Centralizing all IT decisions is not a solution All business units and local employees need a

voice in the decisions to tailor their business to the local culture and customers

Striking such a balance is a major IS emphasis

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cont. Assigning Decision Rights (Figure 2-9)

Six governance styles (the rows)1. A business monarchy is where C-level executives

(CIO..) hold the right to make decisions

2. IT monarchy = where IT executives hold the right to make decisions

3. Feudal is where business unit leaders (or delegates) have decision or input rights

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cont..

4. Federal means that the rights are shared by C-level executives and one other tier of the business hierarchy

5. A duopoly is where one IT group and one business group

share a right

6. Anarchy is where individual process owners or end users hold a right

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cont. Assigning Decision Rights (Figure 2-9)

Five decision areas (the columns)

1. IT principles are high-level statements about how IT will be used to create business value

2. IT infrastructure strategies state the approach for building shared and standard IT services across the enterprise

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cont.

3. IT architecture states the technical choices that will meet business needs

4. Business application needs is where the business defines its application needs

5. IT investment and prioritisation defines the process for moving IT-based investments through justification, approval and accountability

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cont.

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Duke Energy InternationalCase example: IS Governance

US HQ but operates all over, esp. Latin America – manages a diverse portfolio of natural gas and electric supply, delivery, and trading businesses

Product and service innovation combined with speed and flexibility are key drivers

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Duke Energy InternationalCase example: IS Governance…

IT Governance is based on Principles and Relationships

8 Principles in managing Information Management (IM):1. Agree on the reason for being2. Have a vision for IM3. Put a clear organizational design in place4. Implement successful IT governance5. Implement demand management6. Design useful reporting information flows7. Manage business-IM value relationships8. Implement global collaborative networks

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Duke Energy InternationalCase example: IS Governance cont.

Regional CIOs follow these guidelines:

I will involve others if the consequences of my actions affect others

I will not involve others if it just affects me

I will inform others when the consequences of my actions will be of benefit to others

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Duke Energy InternationalCase example: IS Governance cont.

Aims to foster relationships with the business which:

Increase nimbleness

Help identify opportunities (save costs)

Lead to innovation

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3. Investing:Shaping the IT Portfolio

IT investments are large and important to company success How to make such investments is getting

increased attention

Business executives can no longer “blame CIOs” for poor IT investments CIOs can only implement good systems They are not responsible for changing business

practices to take advantage of those systems = the job of line executives!

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3. Investing:Shaping the IT Portfolio – A Strategic View of

Making IT Investments Intense competition in ‘non-regulated’

industries forced executives in these to innovate By investing in IT By improving their business processes, and By offering new products and services

These innovations, in turn, increased productivity Virtuous circle (Figure 2-10)

Competition leads to innovation, which leads to productivity increases

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3. Investing:Shaping the IT Portfolio – A Strategic View of Making IT Investments cont.

Sequencing and timing IT investmentsCompanies that reaped the highest

productivity generally sequenced their IT investments so that new ones built on existing ones

Timing is also important ‘Rush in’ only when it advances company

goals, builds on strengths and cannot be easily replicated by competitors

‘Everybody is doing it’ = not a good reason2-65

Wal-Mart Vs. KmartCase example: Sequencing and timing IT investments

Wal-mart

First installed systems to automate the flow of products in its internal supply chain

Then = turned outward to suppliers co-ordinating its own operations with theirs

Then turned to customers to better plan its merchandising mix and replenishment

‘Last’ = data warehouse

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Wal-Mart Vs. KmartCase example: Sequencing and timing IT

investments…

Kmart = did not get the sequence right

First = used IT to target its marketing promotions Vs. investing in supply chain

As a result – increase in demand from successful promotions could not be met due to problems getting products into stores

Lost sales and $$$$

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3. Investing:Shaping the IT Portfolio – A Strategic View of

Making IT Investments cont.

Complementing IT investments IT investments do not reap anticipated

results until accompanying management practices change to take advantage of potentially better ways of working

NOTE: IT is not the only contributor to increased productivity

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3. Investing:Shaping the IT Portfolio – A Tactical View of Making IT

Investments Much attention has been placed on shaping

the IT portfolio as business executives seek to maximize the business value of their IT investments

Most companies have far more opportunities than they can fund Must find a way to prioritize the possibilities to best

support their business’ strategic objectives Prioritization “Doing more with less”

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AXA FinancialCase example: Prioritizing projects

AXA Group = global financial services organization with 140,000 employees

Introduced a governance process to instill more efficient management controls Key principle = not all projects and investments are

created equally Each one’s merit depends on its economics, not on

executives’ emotional attachment to it or other non financial factors

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AXA FinancialCase example: Prioritizing projects cont.

Introducing a New Methodology

The Prioritization Process Winnowing the Wish List

Selecting Business Objectives

Prioritizing the Objectives

Ranking Projects Using the Objectives

Funding the Projects2-71

AXA FinancialCase example: Prioritizing projects cont.

The process uses 4 filters:

1. The EVP’s wish list filter2. The must-have/should-have filter3. The UMT prioritization filter, and4. The business case filter

The result is a list of projects that can be funded

Benefits of the Project Prioritization Process

Future Plans

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3. Investing:Shaping the IT Portfolio cont.

Benefits Come More From the Discussions Than the Prioritizations

When the discussions are structured, focused and well moderated, the participants better understand the business goals, better support others and other business units and are more committed

Leads to:

Healthier teamwork

Better decision processes, and

Better definitions of projects

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Put Projects into Categories Where They Are Comparable

Once defined, projects belong in different categories and thus require different treatment

E.g. R&D projects can’t generate immediate tangible benefits

Have a minimum $ - projects below this should be funded from discretionary budget

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Address Project Risks

1. Risk that project will fail

Need mitigation strategies and include cost thereof in the project cost

2. Risk of not doing the project

E.g. Virus protection

3. Risk that it is the wrong project for what is trying to be achieved

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Prioritize Quarterly, and Apportion Your Budget Accordingly

Not wise to close the approved list of projects for a long time

Track projects and if significant deviations = consider project costs, risks and benefits

Be Consistent

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4. Managing:Establishing Credibility and Fostering

Change CIOs are in the change business

Information systems bring about change

BUT – before a CIO and the IS organization will be heard as a voice for change, they must be viewed as being successful and reliable

To foster change, a CIO must establish and then maintain the credibility of the IS organization

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4. Managing:Establishing Credibility

The first job of IS management is to get the “today” operation in shape

Until that task is accomplished, CIOs will have little credibility with other top management

Managing “today” includes:

Computer operations

Technical support (including networks)

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4. Managing:Establishing Credibility conti..

The help desk, and Maintenance and enhancement of existing systems

Delivery oriented with a high level of service

Some = outsource parts

Once you have “today” working well – they will listen to you re “tomorrow”

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4. Managing:Fostering Change

‘Techies’ presume a technically elegant system is a successful one Not so. Many technically sound systems have

turned into implementation failures because the people side of the system was not handled correctly

IT is all about managing change New systems require changing how work is done Focusing on the technical aspects is only ‘half’ the

job. The other job is change management

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4. Managing:Fostering Change cont.

People resist change, especially technological change

May react in several ways: Deny, distort or delude

ODR (and others) methodology: Sponsor Change agent Target

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4. Managing:Fostering Change cont.

Working across Organizational Lines

CIOs now find that systems they implement affect people outside their firm

Supply side = fewer suppliers but deeper relationships

Customer side = need buy-in to building / using inter-business systems

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REXAMCase example: 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

Initial doubts Vs. “If we can demonstrate value to them they will (use it)”

Benefits of the Project Prioritization Process

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organizational lines

Phase 1: CRM Made Simple

Testing the System with Customers

Phase 2: Knock Customer’s Socks Off

Competitive advantage? – They’ll ‘never leave’!

The CIO’s Role

The Steering Committee’s Role2-84

REXAMCase example: Working across organizational

lines cont.

Rexam case illustrates a number of points about the CIO’s current role:

1. CIOs are working outside as much as inside these days

2. They are working in concert with their peers in the company in selling and implementing their visions

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organizational lines cont.

3. To stay ahead they need to keep their staffs experimenting with new technologies

4. Selling the vision occurs one customer, supplier or executive at a time

– Need to know how ‘IT ready’ a customer, supplier, executive, department or group is

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• IT decision making must be ‘shared’ - The main responsibility for managing the use of IT needs to pass to the line, while the management of the IT infrastructure is retained by the IS group

• It is reflected in the following saying:

1. “We used to do it to them”- IS required end users to obey strict rules for getting changes made to systems, submitting job requests, etc.

Conclusion

Conclusion Conti..

2. Next, we did it for them”-IS moved to taking a service orientation

3. “Now, we do it with them”-which reflects “partnering”

4. “We are moving toward teaching them how to do it themselves”

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• To achieve this transformation, CIOs must play a leadership role in their enterprise and develop partnerships with senior management, internal and external customers, and suppliers

Conclusion cont.

Summary

Traditional Functions Are Being Nibbled Away Roles Toward IS Lite The CIO’s Responsibilities Four Aspects of the CIO role

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2-1 The Top IS Job Lecture 6. Today lecture Summary Traditional Functions Are Being Nibbled Away...

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