Six IT Decisions Your IT People Six IT Decisions Your IT People Shouldn’t MakeShouldn’t Make

Jeanne W. Ross and Peter WeillJeanne W. Ross and Peter Weill

EnFuegoKacey Baxter, Ashish Mistry,

Dan Myers-Power and Mark Rose

April 10, 2004

Strategy DecisionsStrategy Decisions

How muchshould we

spend on IT?

Define IT’s role in the company

Decide how IT fits the company strategy

Determine the funding needed to achieve objective

Source: Ross and Weill

Strategy DecisionsStrategy Decisions

How muchshould we

spend on IT?

Which businessprocesses

should receive our IT

dollars?

Make clear decisions about what initiatives receive funds

Prevents overloading the IT department

Source: Ross and Weill

Strategy DecisionsStrategy Decisions

How muchshould we

spend on IT?

Which businessprocesses

should receive our IT

dollars?

Which ITcapabilitiesneed to be

companywide?

Determine which functions should be centralized

Balance centralization and flexibility of business units

Source: Ross and Weill

Execution DecisionsExecution Decisions

How good do our IT services really need to

be?

Which features are needed based on costs and features

Prioritize service options

Source: Ross and Weill

Execution DecisionsExecution Decisions

How good do our IT services really need to

be?

What security and privacy risks will we

accept?

Examine the trade-offs between security/privacy and convenience

Find balance

Source: Ross and Weill

Execution DecisionsExecution Decisions

How good do our IT services really need to

be?

What security and privacy risks will we

accept?

Whom do we blame if an IT initiative fails?

Assign an executive to be accountable for every IT project

Monitor metrics to realize value of business systems

Source: Ross and Weill

Bush Boake AllenBush Boake Allen

• Bush Boake Allen’s Project Mercury appears to be a pet project, no initial buy-in from full management team

• Strategy is lacking• Want to spend, spend, spend with no clear direction on

IT needs• Senior Manager is ignoring his IT responsibility

Bush Boake AllenBush Boake Allen

How muchshould we

spend on IT?

Which businessprocesses

should receive our IT

dollars?

Which ITcapabilitiesneed to be

companywide?

No strategic direction for Project Mercury

No real idea of costs, could be up to $500,000 per site

Source: Ross and Weill

Trying to fund everything due to lack of focus

One technologist assigned—overwhelming initiative

Better spent in R&D?

Project Mercury launched without full team buy-in

Decentralization has been key to company strategy

How will “the Spider” fit into strategy?

Alibris -- StrategyAlibris -- Strategy

How muchshould we

spend on IT?

Which businessprocesses

should receive our IT

dollars?

Which ITcapabilitiesneed to be

companywide?

Source: Ross and Weill

Consultants were doing lots of customization

What were the future staffing level requirements?

Would there always be a need for consultants?

There was no budget for IT Spending

If a problem occurred, they threw more money it

Database conversion and eCommerce launch

How could they automate fulfillment?

How do they deal with SKUs?

Alibris -- ExecutionAlibris -- Execution

How good do our IT services really need to

be?

What security and privacy risks will we

accept?

Whom do we blame if an IT initiative fails?

Source: Ross and Weill

Did they need Oracle? Did they need Thunderstone?

What were the consequences of not launching?

Could they afford to have the system “down?”

Case pre-dates attention on identity theft issue

Do we need to protect the booksellers data?

Who secures the customer data?

Everything was delegated to the consultants

No one internally had ultimate responsibility

Too willing to jump platforms

Oracle at Oregon Steel MillsOracle at Oregon Steel Mills

• Oracle Implementation/Upgrade Goals– Upgrade Portland from 9.4 (Character) version to 10.7 (Windows)– Convert Pueblo from legacy to version 10.7 (Windows) -- Legacy not Y2K Compliant– Standardized General Ledger across all companies (15 in consolidated group)– Reduce support requirements– Faster closes– Interchangeable staff between locations

• What happened?– Two database installations: one in Pueblo, one in Portland (KPMG’s Idea)– Two license fees (Oracle didn’t mind)– Standardized General Ledger to start, slowly drifted apart as each location added new

accounts and functionality– Manufacturing resisted conversion so only Financials used– Lots of customization = Additional fees when upgrading to 11i

• Why did it happen?– Turnover: Controller, Project Manager, Lead Accountant, Business Analysts– CFO clueless about IT and not involved– No one was ultimately held responsible for the project

Outsourced IT at SEH-AOutsourced IT at SEH-A

• Goals of Outsourcing IT (aka “Fantasy Land”)– Reduce head count = reduce costs– Better level of support because of better trained staff– Flexibility with staffing levels– Overall lower cost of IT

• The Results (aka “Reality”)– No drop in staffing -- same people work there as before– Savings in benefits offset by higher hourly rates– No incentive to upgrade or standardize operating systems (95, 98, 2000, XP)– “Guinea Pigs” for Lotus Notes R5 (very buggy)– Still spending $2M per year on customized programming for manufacturing– They love “closing tickets”– Not very flexible in terms of finding solutions– Current person in charge of IT isn’t even Manager level and reports to Facilities

Key’s to IT SuccessKey’s to IT Success

• Senior Managers need to take a key role in IT decisions and be accountable

• Delegating responsibility without active involvement is a bad idea

• Business process may also change

• Training for non-IT executives

• Consultants don’t know everything