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Introduction
EvolutionsBusiness executives viewed the ICT function as the province of the technocrats primarily interested in new features with little relevance to real-world business problems;Technology executives have often considered business managers to be shortsighted, lacking vision to exploit all that technology has to offer.
Struggle as they attempt to implement increasingly complex systems in the face of rapid change in business and technology
Technology, Business, and Societal Evolution During the 20th century
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 1 Figure 1- 2
1900 1950 2000
AgriculturalEconomy
IndustrialEconomy
InformationEconomy
Typical mathematical formula:D=B 2 -4AC
Equivalent FORTRAN statement:D=B ** 2-4*A*C
Telegraph
Technology Evolution
Social and Business Evolution
Photos reprinted with permission from AT&T and IBM
Evolution of Computing Performance
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan., Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.
1
10
100
1,000
10,000
100.000
1,000,000
1980 1990 1996
PCs and workstations
Mainframe
Adapted from: McKenney, J., Waves of Change: Business Evolution through Information Technology , Boston: Harvard Business School Press, 1995.
Price Performance Trends of Mainframes and PCs $/MIPs
*Ratio of MIPs per Dollars (Mainframes:PCs)
8:1*
286:1*
900:1*
Introduction Figure I-1
Examples
American airlines
Baxter
Mrs. Field Coockies
Open Market
FactsBusiness executives have begun to wrest control from IT executives who have failed to step up to the challenge of entering the boardroomWe see IT-enabled “virtual organizations” in which many small independent agents (or firms) band together as nodes on an information network to achieve dramatic increases in scope and scale.Independency of time and physical location.
21st Century insights: Themes
Expanded processing capacity enables convergence of voice, video and data; encourages real-time transactions and interactivity; dramatically increases connectivity and access.
The business models that dominated the industrial economy are evolving to take advantage of of the capabilities of new technologies.
ICT infrastructure becomes more standardized, modular and scalable From cost avoidance to asset-based, strategic approach
Organizations “buy” rather than “make” IT-applications
Cooperation amongst 4 constituencies Business executives, IT-executives, users, technology
providers
Need to ensure high levels of security, privacy, reliability, and availability.
Theme 1:Market structure and industry dynamics
Theme 1:Market structure and industry dynamics
Porters value chain model
Administration and infrastructure
Human resource management
Product/technology/development
Procurement
Support activities
Primary activities
Inbound logistics
Operations Outboundlogistics
Sales andmarketing
Services
Valueadded -cost = MARGIN
Well defined roles, responsibilities and relationships were governed by standardized policies, procedures and agreements
The Value Chain Defines Industry Structure and Relationships
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan.,
Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.Introduction Figure I
-2
Evolution towards virtually integrated industries
Theme 2: Evolving Business Models
What business are you in? What is you business model?Who are our customers? Our suppliers?ASP models
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 2 Figure 2-1
Theme 3:The Impact of IT on Strategy and Operations
Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information Strategy and Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002. Chapter 1 Figure 1-6
Factory Strategic
Support Turnaround
Goal: Improve performance of core processes
Leadership: Business unit executives
Project Management: Process reengineering
Goal: Improve local performance
Leadership: Local level oversight
Project Management
No strategic impact from IT
Goal: Transform organization or industry
Leadership: Senior executives & board
Project Management: Change management
Goal: Identify and launch new ventures
Leadership: Venture incubation unit
Project Management: New venture development
IT Impact on Core Strategy
IT Im
pac
t o
n C
ore
Op
erat
ion
s
Low
High
High
Reliable zero defect operations Steady stream of technological innovations
Theme 4:Prioritizing IT investments
Benefits from investments in Networked IT Infrastructure Functionality and flexibility
Benefits from doing business on a Networked IT Infrastructure Commerce: operating efficiency, process
performance Content/knowledge community
Theme 5:Assimilation and Organizational Learning
Success
Success
Success
stagnationblock A
stagnationblock B
stagnationblock C
narrowlyfocused andnot marketed
too efficiencydominated
Phase 1
Phase 2
Phase 3
Phase 4
Opportunity Identificationand investment
Organizational learningand adaptation
rationalization andContinuous evolution
widespreadtechnology transfer
Lack ofAttentionAndcommitment
Theme 6:Buy versus Make
User friendly personal software packagesCan I outsource data centers, networks, help desks, PC supportAllignment of short term and long term goals and incentivesProvisions for death and divorce
Theme 7: Partnership among ConstituanciesThree Eras of IT evolution
Administrativeframework
Target forIT use
Justification/Benefits
Era IMainframe
Era II Micro-computer
Era IIIInternetwork
Regulatedmonopoly
Back officeAutomation
OrganizationalProductivity
FreeMarket
IndividualIndividual/Group
Effectiveness
SharedPartnership
Electronic integra- Tion and Learning
BusinessAdvantage
Five Questions to the Managerto be answered every six months or so.
1. Do the perspectives and skills of the IT and general management team fit the firm’s changing applications trust, operations challenges, user environment, and often shift in strategic relevance ?
2. Is the firm organized to identify , evaluate , and assimilate new IT-opportunities? In this fast moving field an internally focused, low-quality staff can generate severe problems. Unprofitable, unwitting obsolescence (from which it is hard to recover) is terribly easy here. There is no need for a firm to adopt leading-edge technology (indeed, many are ill equipped to do so), but it is inexcusable not to be aware of what the possibilities are.
3. Are the three main management systems for integrating the environment to the firm as a whole in place and implemented? These are the strategic planning system, the management control system and the project management system.
4. Are the security , priority setting, manufacturing procedure , and change control systems in the IT operations function appropriate for the role it now plays in the firm?
5. Are organization structures and linking mechanisms in place that will ensure informed senior management on IT-evolutions such that IT is aligned with the needs of the company?
Investing in ICT
If you think
good information systems are expensive,
try without them !
Company
company not the same anymore
information system became strategic
quality requirements finally stated
management at all levels involved
Global knowledge management
IT - departments
Not the same anymore
much larger action radius
role of the central system has changed
hardware within the budget of a department
required knowledge not pure technical anymore
User
Not the same anymore either not doing his first IT-project
got some computer training
has his own preferred packages
wants to build his own little system
doesn’t want to be forced into a system
wants to be involved in the development
Nolan evolution of IT-usage
initiation
contagioncontrol
maturity
Four stages of DP growth:
NOLAN phases
Stage Initiation contagion control maturity
orientation cost reductionnew functionsmoratorium database inquiry
organizationwhere first useddispersed central controlled distributed
manager operationsmanager
middle managermiddle managerdirector
management viewlax selling controlling a resource
applications supporting diversificationdatabases end-user computing
control little very little strong normal
user involvementinterviews ,manuals
PC's project groupstransparent
Success of 21st Century Company
Immediate availability of the right information on the right moment in time Continuous scan of environment
Learning company Knowledge base
Immediate reaction Zero Latency Company
Flexible organizational structure of independent cellsvirtual company
Corporate Information Manager
Depends on:
Goals and Technologies
Goals and Requirements
Information as a resource
Zero Latency
E-commerce
Flexibility
Efficiency
Knowledge Management
Partnerships
Diversity
Added Value
Goals and Requirements
Information as a resource
Zero Latency
E-commerce
Flexibility
Efficiency
Knowledge Management
Partnerships
Diversity
Added Value
Enabling TechnologiesWorkflow Inter(tra)netWEB
Data Mining
Secure Payments
Data Warehousing
Databases, ERP
Telecom, broadband
Development environments
XML
System management
Enabling TechnologiesWorkflow Inter(tra)netWEB
Data Mining
Secure Payments
Data Warehousing
Databases, ERP
Telecom, broadband
Development environments
XML
System management
Citation Citation
There is nothing more difficult to plan ,
more doubtful of success,
nor more dangerous to manage
than the creation of a new system.
For the initiator has the enmity of all who
would profit by the preservation of the old
system and merely lukewarm defenders in
those who would gain by the new one.
Machiavelli, 1513