Chapter 1Chapter 1IntroductionIntroduction

Managing the Information Managing the Information Technology ResourceTechnology Resource

Paula GouldingPaula Goulding

Chapter OutlineChapter Outline

Evolution of role of ITEvolution of role of IT Role of IT management versus other Role of IT management versus other

business functionsbusiness functions View of IT by IT executivesView of IT by IT executives How to better manage IT resourcesHow to better manage IT resources Key issues in the management of ITKey issues in the management of IT Importance of successfully managing ITImportance of successfully managing IT

Primary PurposePrimary Purpose

IT is important and necessary for a IT is important and necessary for a successful organizationsuccessful organization

Successful management of IT is necessary Successful management of IT is necessary for competitive advantagefor competitive advantage

3 Strategies for Competitive 3 Strategies for Competitive AdvantageAdvantage

Cost leadershipCost leadership– Competing with lower costsCompeting with lower costs

Product differentiationProduct differentiation– Competing with valueCompeting with value

Product focusProduct focus– Competing by restricting one’s marketCompeting by restricting one’s market

IT Management CategoriesIT Management Categories StrategicStrategic

– Pertinent to long-term attainment of goals and Pertinent to long-term attainment of goals and business as a wholebusiness as a whole

TacticalTactical– Needed to achieve strategic plans and goals to Needed to achieve strategic plans and goals to

produce changes for successproduce changes for success OperationalOperational

– Process and actions that must be performed on Process and actions that must be performed on a day-to-day basis to maintain performance levela day-to-day basis to maintain performance level

Additional Skills of IT ManagersAdditional Skills of IT Managers

FinancialFinancial Human ResourceHuman Resource Relationship Relationship

ManagementManagement LegalLegal

GovernanceGovernance MarketingMarketing NegotiatingNegotiating LeadershipLeadership

John RockartJohn Rockart“The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization’s efforts for the period will be less than desired.”

3 Primary Computing Eras3 Primary Computing Eras

1.1. Mainframe Mainframe Computer EraComputer Era

2.2. PC Computing EraPC Computing Era

3.3. Pervasive Pervasive ComputingComputing

Historical View of ITHistorical View of IT

Initially for government/military useInitially for government/military use Businesses used for financial automation Businesses used for financial automation Data Processing was key functionData Processing was key function Computers were costly and large in sizeComputers were costly and large in size Not widely usedNot widely used

Historical ViewHistorical View Cost decreasedCost decreased Size decreasedSize decreased Use of personal computers increasedUse of personal computers increased Business staff and IT staff began to Business staff and IT staff began to

interactinteract Technology issues increasedTechnology issues increased Networks, E-mail, and Internet became Networks, E-mail, and Internet became

necessitynecessity

Role of ITRole of IT

No longer just serves a businessNo longer just serves a business Integral in business strategyIntegral in business strategy Impacts every area of businessImpacts every area of business Complexity increasesComplexity increases How does IT function vs. the entire How does IT function vs. the entire

organizationorganization Responsible for the integration of Responsible for the integration of

informationinformation

Role of IT TodayRole of IT Today

Enabler of E-BusinessEnabler of E-Business

All aspects of IT are more externally visibleAll aspects of IT are more externally visible Serve as mediator among various functionsServe as mediator among various functions

– DisintermediationDisintermediation– ReintermediationReintermediation– HypermediationHypermediation– InfomediationInfomediation

DisintermediationDisintermediation

Eliminates the middlemanEliminates the middleman Electronic stock tradingElectronic stock trading Forces focus on service differentiationForces focus on service differentiation

ReintermediationReintermediation

Use of Internet to reassemble buyers and Use of Internet to reassemble buyers and sellers in new wayssellers in new ways

Allows negotiation of prices, warranties, Allows negotiation of prices, warranties, quality, shippingquality, shipping

Example includes merging of banking, Example includes merging of banking, insurance, and other financial servicesinsurance, and other financial services

HypermediationHypermediation

Interactions found via Internet transactionsInteractions found via Internet transactions Complete, seamless, invisible supply chain Complete, seamless, invisible supply chain

to customersto customers Leverages external partnersLeverages external partners

InfomediationInfomediation

Allows technology users to manage large Allows technology users to manage large amounts of informationamounts of information

Search engines and portals provide for Search engines and portals provide for narrowing searchesnarrowing searches

Data mining technology is criticalData mining technology is critical IT helps business sift through information for IT helps business sift through information for

insight and clarityinsight and clarity

Change AgentChange Agent

Dynamic StabilityDynamic Stability– IT supports business in dynamic changes with IT supports business in dynamic changes with

no change to business processesno change to business processes

Can enable/inhibit incremental and radical Can enable/inhibit incremental and radical changeschanges

Innovation may depend on ITInnovation may depend on IT

Enabler of GlobalizationEnabler of Globalization

Expands business Expands business presence beyond presence beyond bordersborders

IT maintenance of IT maintenance of Infrastructure and Infrastructure and TechnologiesTechnologies

IT/Business GapIT/Business Gap

IT/Business alignment criticalIT/Business alignment critical AlignmentAlignment

– Application of IT in an appropriate and timely Application of IT in an appropriate and timely manner, in harmony with business goals, manner, in harmony with business goals, strategies, and needsstrategies, and needs

EnablerEnabler InhibitorInhibitor

CSC Survey Top RankingsCSC Survey Top Rankings

Information Systems alignment with Information Systems alignment with Corporate Goals ranked 1Corporate Goals ranked 1stst or 2 or 2ndnd 9 of 11 9 of 11 years!years!

Organizing & utilizing dataOrganizing & utilizing data Connecting to customers, suppliers, and/or Connecting to customers, suppliers, and/or

partners electronicallypartners electronically Optimizing organizational effectivenessOptimizing organizational effectiveness

IT vs. Other FunctionsIT vs. Other Functions

Encompasses entire enterpriseEncompasses entire enterprise Affects all business functionsAffects all business functions Extends beyond business boundariesExtends beyond business boundaries Affects every level of managementAffects every level of management Impact affects entire value chain, including Impact affects entire value chain, including

suppliers and customerssuppliers and customers Creates synergy between departmentsCreates synergy between departments

Porter’s Generic Value ChainPorter’s Generic Value Chain

Value of ITValue of IT

IT usage has increased three-fold since IT usage has increased three-fold since 19781978

Substantial capital expendituresSubstantial capital expenditures Cost of doing businessCost of doing business Productivity measurementProductivity measurement Alignment with strategic business goalsAlignment with strategic business goals

Luftman’s 6 ComponentsLuftman’s 6 Components

Communications Communications MaturityMaturity

Competency/Competency/Value Measure-Value Measure-ment Maturityment Maturity

Governance Governance MaturityMaturity

Partnership Partnership MaturityMaturity

Scope and Scope and Architecture Architecture MaturityMaturity

Skills MaturitySkills Maturity