Luftman_Ch01

© 2004 Managing the Information Technology Resource, Jerry N. Luftman Chapter 1- Slide 1

Chapter 1

Introduction

Managing the Information

Technology Resource

Jerry N. Luftman


Chapter Outline

• Evolution of role of IT

• Role of IT management versus other

business functions

• View of IT by IT executives

• How to better manage IT resources

• Key issues in the management of IT

• Importance of successfully managing IT


Primary Purpose

• IT is important and necessary for a

successful organization

• Successful management of IT is

necessary for competitive advantage


3 Strategies for Competitive

Advantage

• Cost leadership

– Competing with lower costs

• Product differentiation

– Competing with value

• Product focus

– Competing by restricting one’s market


IT Management Categories

• Strategic

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

• Tactical

– Needed to achieve strategic plans and goals to produce changes for success

• Operational

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


Additional Skills of IT Managers

• Financial

• Human Resource

• Relationship

Management

• Legal

• Governance

• Marketing

• Negotiating

• Leadership


John 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 Eras

1. Mainframe

Computer Era

2. PC Computing Era

3. Pervasive

Computing


Historical View of IT

• Initially for government/military use

• Businesses used for financial automation

• Data Processing was key function

• Computers were costly and large in size

• Not widely used


Historical View

• Cost decreased

• Size decreased

• Use of personal computers increased

• Business staff and IT staff began to

interact

• Technology issues increased

• Networks, E-mail, and Internet became

necessity


Role of IT

• No longer just serves a business

• Integral in business strategy

• Impacts every area of business

• Complexity increases

• How does IT function vs. the entire

organization

• Responsible for the integration of

information


Role of IT Today


Enabler of E-Business

• All aspects of IT are more externally visible

• Serve as mediator among various functions

– Disintermediation

– Reintermediation

– Hypermediation

– Infomediation


Disintermediation

• Eliminates the middleman

• Electronic stock trading

• Forces focus on service differentiation


Reintermediation

• Use of Internet to reassemble buyers and

sellers in new ways

• Allows negotiation of prices, warranties,

quality, shipping

• Example includes merging of banking,

insurance, and other financial services


Hypermediation

• Interactions found via Internet transactions

• Complete, seamless, invisible supply

chain to customers

• Leverages external partners


Infomediation

• Allows technology users to manage large

amounts of information

• Search engines and portals provide for

narrowing searches

• Data mining technology is critical

• IT helps business sift through information

for insight and clarity


Change Agent

• Dynamic Stability

– IT supports business in dynamic changes with

no change to business processes

• Can enable/inhibit incremental and radical

changes

• Innovation may depend on IT


Enabler of Globalization

• Expands business

presence beyond

borders

• IT maintenance of

Infrastructure and

Technologies


IT/Business Gap

• IT/Business alignment critical

• Alignment

– Application of IT in an appropriate and timely

manner, in harmony with business goals,

strategies, and needs

• Enabler

• Inhibitor


CSC Survey Top Rankings

• Information Systems alignment with

Corporate Goals ranked 1st or 2nd 9 of 11

years!

• Organizing & utilizing data

• Connecting to customers, suppliers,

and/or partners electronically

• Optimizing organizational effectiveness


IT vs. Other Functions

• Encompasses entire enterprise

• Affects all business functions

• Extends beyond business boundaries

• Affects every level of management

• Impact affects entire value chain, including

suppliers and customers

• Creates synergy between departments


Porter’s Generic Value Chain


Value of IT

• IT usage has increased three-fold

since 1978

• Substantial capital expenditures

• Cost of doing business

• Productivity measurement

• Alignment with strategic business

goals


Luftman’s 6 Components

• Communications

Maturity

• Competency/

Value Measure-

ment Maturity

• Governance

Maturity

• Partnership

Maturity

• Scope and

Architecture

Maturity

• Skills Maturity

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