MANAGING INFORMATION TECHNOLOGY
7th EDITION
CHAPTER 13
LEADING THE INFORMATION SYSTEMS
FUNCTION
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MANAGING THE IT ASSETS
Technology
Computer and communications infrastructure that enables
information sharing over standard IT platforms
Human Resources
IT people talent with appropriate skills mix
Business/IT Relationship
Partnering relationships between business and IT managers,
including joint decision-making
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EVOLVING IS LEADERSHIP ROLE
• Executive IS leadership role has evolved over time due to:
– Rapid technological change
– Opportunities for strategic IT applications and business intelligence
– Increase in IT-savvy business managers
– Ubiquitous IT usage
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TOP IS EXECUTIVE ISSUES IN 2010
1. Business productivity and cost reduction
2. Business agility and speed-to-market
3. IT and business alignment
4. IT reliability and efficiency
5. Business process re-engineering
Source: Survey of Society of Information Management members in mid-2010
Luftman and Ben-Zvi, MISQ Executive, Dec. 2010
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IS ORGANIZATION RESPONSIBILITIES AND
GOVERNANCE
• IS GOVERNANCE
- Locus of decision-making and accountability for:
1) computer and network operations
2) application software (development of new applications and
maintenance of existing applications)
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TWO PRIMARY IS RESPONSIBILITIES
Computer & Network Operations
Application Software Development &
Maintenance
Planning, purchasing, installing,
operating, and maintaining/upgrading:
- Acquiring (custom-developing,
purchasing or “renting”)
- Computer hardware
- Implementing
- Maintaining/upgrading
- Systems software on which applications
software “runs”
- Local area networks and wide area
networks that support distributed
computing and telecommunications for
the enterprise
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Application software for:
- the entire enterprise
- business units/departments
- smaller work groups
- individuals
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IS GOVERNANCE ALTERNATIVES
• Centralized
Decision making and IS workers are concentrated within a central IS unit to take
advantage of economies of scale and opportunities for integration of IS resources
• Decentralized
Decision making and IS workers are dispersed to be closer to business managers
within highly autonomous business units and be responsive to their needs
• Federal
Combines both the centralized and decentralized designs to have the “best of both
worlds.” The most typical Federal design is:
– Centralized responsibilities for computer operations & networks
– Decentralized responsibilities for applications software
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IS GOVERNANCE ALTERNATIVES
Fig 13.2
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IS GOVERNANCE ALTERNATIVES
.
• Another type of Federal IS governance design:
- Centralized for “Shared” resources (services & applications)
- Decentralized for “Local” IS resources
“Local” Applications
Software applications specific to
a business unit or function
Shared Applications
(Enterprise systems such as ERP, CRM)
Shared IT Services
Fig 13.1: Shared versus “Local” IS Resources
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SHARED SERVICES IN A MULTINATIONAL FIRM
Shared Services Organization for Asia Pacific region at British America Tobacco
Source: Brown and Vessey, 2003
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MANAGING IT SERVICE DELIVERY
Technology Tradeoff Decisions
- Equipment Location
- Client/Server Allocations
- Operating System Standards
- Network Redundancy
- Bandwidth Capacity
- Network Response Time
- Security, Privacy and Network Access
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GREEN COMPUTING TRADEOFF DECISIONS
• Hydroelectric Power
• Virtualization Tools
• Thin Clients
• Enhanced sleep modes for microcomputers
• E-waste recycling
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EXAMPLE: BECOMING GREEN WITH BUSINESS
INTELLIGIENCE
United Parcel Service
• Business intelligence helped identify ways for UPS to reduce idling times
of its delivery trucks, saving fuel and reducing pollution
- Creates fuel-efficient routes for its package delivery vehicles
- Cuts fuel consumption by monitoring and reducing idling time of
trucks at their delivery destinations
• Move from a scheduled maintenance program to a condition-based
maintenance program for its trucks
- Fewer truck breakdowns and fewer replacement parts required for the
vehicles, which eliminates waste
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CHARGEBACK SYSTEMS
• Chargeback systems place control of IS spending with business
managers and enables them to better understand their true IT costs
• Examples of IT resources that can be part of chargeback costs:
- IS personnel (time spent and rate for specific skills)
- Computer usage (or computer cycles used)
- Disk file space (data storage costs based on type of storage unit)
- Number of transactions processed
- Amount of computer main memory used (per unit of time)
- Number of users of an application
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CHARGEBACK SYSTEMS
Potential Benefits
Fig 13.4
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CHARGEBACK SYSTEMS
• What makes a good
Chargeback System?
- Understandable
- Prompt and regular feedback
- Controllable
- Accountable
- Costs related to benefits
- Consistent with goals
Fig 13.5
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SERVICE LEVEL AGREEMENTS (SLAs)
Service Level Agreements (SLAs)
Defines the client expectation for a specific type of IT service as well as
procedures to follow when these expectations are not met.
• Should include:
- A simple definition of the service to be provided (e.g., help desk support)
- The name(s) and contact information of IS personnel to contact for this
service
- A table listing the services to be provided and their costs (e.g., how quickly
different types of problems will be responded to, and the costs associated
with providing this type of service level)
- Escalation procedures (e.g., who to contact if the agreed upon service
response is not being provided)
- A sign-off page for the appropriate business client and the IS liaison
preparing the SLA document
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IT SERVICE MANAGEMENT with ITIL
• Information Technology Infrastructure Library (ITIL)
- Processes that focus on the business aspect of IT service
delivery - created by the British Office of Government
Commerce
- Describes how various IT processes should be performed to
ensure outcomes such as:
- Adequate computer capacity exists for new IT applications or
other IT infrastructure changes
- Tracking of a computer incident from the time it first appears
until a system change is made to permanently fix the problem
- Formal change management process are followed for
changes to any component of an IT system
ITIL Official Site
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IT SERVICE DELIVERY:
SUPPORTING COMPUTER USERS
• IT support for employees using computer tools, including
those developing software applications with these tools
• Key principle:
- Unique aspects of the
organization, as well as the different
support needs of work units and
computer users, need to be taken into
account when designing strategies
and tactics for user support
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Fig 13.6 Framework for Designing User Support
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STRATEGIES FOR SUPPORTING USER COMPUTING
1.Laissez-Faire (“hands-off”)
2. Acceleration
3. Containment
4. Controlled Growth
Fig 13.7 Strategies for User Computing
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STRATEGIES FOR SUPPORTING USER COMPTING
Laissez-faire
• “Hands off” approach: low levels of control but also few resources
for support
• Common in 1980s when PCs were first introduced into
corporations: IT leaders did not attempt to support or control their
introduction.
• Today: approach may be used with new personal technologies
Acceleration
• Low levels of formal controls and significant investments in
resources to support users, to promote growth in tool usage
• The goal is to encourage users to acquire and learn about computer
tools, including developing their own applications, before
introducing heavy control policies
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STRATEGIES FOR SUPPORTING USER COMPTING
Containment
• Risk adverse approach with high levels of formal controls and
procedures, including strict policies for tool security
• Appropriate for highly regulated environments to be sure policies
and procedures are formulated and enforced
Controlled Growth
• Combines high levels of formal controls and procedures with
significant investments in resources
• Considered to be the ideal, mature approach: organizations initially
begin with a different strategy and then migrate to controlled growth
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SERVICE LEVEL AGREEMENTS FOR DESKTOP SUPPORT
• Speed in responding to user requests is a key performance metric
• Different support levels based on the problem type are established in
consultation with business unit managers
• Different types of problems will have different maximum time periods
in which they should be solved
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Fig 13.8
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COMMON SUPPORT SERVICES
Fig 13.9
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COMMON POLICIES AND PROCEDURES
• Establishing technology “standards” is typically an IS department
responsibility, but some organizations have committees with business unit
representatives to establish policies
• Organizations communicate the policies and procedures to new
employees via orientation programs
• Control Policies have to be modified in response to new technologies,
ways of working, new laws and new external threats
Fig 13.10 Common Policies and Procedures
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SUPPORTING TELECOMMUTERS
• Telecommuters spend at least a part of their regular business
hours using IT to perform their jobs outside of a company’s
physical facilities, using a mobile office, an office in their
personal home, or a temporary office at a shared work center
away from the company’s main office.
• Potential benefits from implementing Telecommuting include:
- Increased workday flexibility and improved work-life
balance for the telecommuter
- Easier accommodation of communications across time
zones for the organization
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MANAGING IT APPLICATIONS
• Legacy Systems
- Maintenance of aging legacy systems can make up a large
portion of IT budget
- Integration of new technologies with legacy systems can be
difficult and time-consuming
- The trend is to replace custom-developed applications with
purchased software packages for common business applications:
the maintenance burden is moved to the vendor, which is
expected to regularly develop revised versions of the software
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IT APPLICATIONS PORTFOLIO APPROACH
• IT Applications Portfolio
– Software portfolio needs to be managed as an asset
– For installed software, a company must know:
- What software it owns
- Where it is located
- What it does
- How effective it is
- What risks are associated with the continued use
– Systems project decisions take into account existing software as
well as projects for new systems already underway
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METRICS FOR IT APPLICATIONS
– Performance metrics for projects to develop new applications:
- High Quality
- On-time Delivery
- Within budget
– IS processes to manage and deliver IT applications
• Example: CMM (or CMMI)
- Five levels of process maturity that can be measured
- For outsourcing vendors, the certified CMM level of a vendor
is often used in client firm evaluations of potential vendors
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FIVE LEVELS OF CAPABILITY MATURITY FOR
SOFTWARE DEVELOPMENT (CMM)
Fig 13.11
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PROJECT MANAGEMENT OFFICE (PMO)
– Management structure to oversee projects and improve
project processes
– Provides benefits in the form of:
- Repeatable processes
- Established change management procedures
- Post-project reviews
- Skilled project leaders
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MANAGING IT HUMAN RESOURCES
– Highest percentage of a typical IS budget is for IS personnel
– Five categories of IS personnel skills:
- Technical
- Project Management
- Business Domain
- Sourcing
- IT Administration
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CATEGORIES OF IT HUMAN RESOURCE SKILLS
Technical Skills
• Systems analysis
• Systems design
• Programming
• Systems testing
• Database design/administration
• IT architecture/standards
• Operations (service delivery/ITIL)
• Mainframe
• Distributed systems
• Operating systems
• Voice/data telecommunications
• Help desk/desktop support
• Continuity/disaster recovery
Project Management Skills
• Project team leadership
• Project planning, budgeting, &
scheduling
• Project risk management
• User relationship management
• CMM utilization
• Working globally/virtual teaming
Fig 13.12
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CATEGORIES OF IT HUMAN RESOURCE SKILLS
Business Domain Skills
• Account management &
communications
• Industry application
knowledge
• Company-specific knowledge
• Function-specific knowledge
• Business process design &
reengineering
• Change
management/readiness
Sourcing Skills
•
•
•
•
Sourcing strategy
Third-party provider selection
Contracting & legal
Vendor relationship
management
IT Administration Skills
• IT governance
• Financial management
• Internal HR management
Fig 13.12 continued
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MANAGING IT HUMAN RESOURCES
– Attracting, recruiting, and retaining qualified staff is a key
responsibility for IS managers in collaboration with an
organization’s HR staff
– Some common practices that managers use to retain valued
IS personnel include:
- Changing the work environment to be more employee-friendly
- Increasing career development opportunities
- Providing community-building initiatives
- Establishing monetary or other employee incentives
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COMMON PRACTICES FOR RETAINING IT WORKERS
Fig 13.13
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INTERNAL AND EXTERNAL IT STAFFING
• Insourcing and Outsourcing of IT skills
Large firms in developed countries (e.g., U.S., Western Europe) today
outsource some IS activities to countries with lower labor costs
- What skills are most likely to be outsourced?
- What skills are most likely to be retained in-house?
Fig 13.14
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MANAGING THE BUSINESS/IT RELATIONSHIP
Business/IT Relationship
Partnering relationships between business and IT managers,
including joint decision-making
- Business managers must work with IS managers to realize
investments in IT resources
- A formal statement of the IS organization’s role may be helpful
in strengthening a strained or failed IT-Business relationship
- A strong relationship is characterized as a partnership
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MANAGING THE BUSINESS/IT RELATIONSHIP
• Horizontal (lateral) mechanisms can be used to help build and
foster the business/IT partnership
Fig 13.15
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EXAMPLES OF HORIZONTAL MECHANISMS
Formal Groups
• Common example: IS Steering Committee with responsibilities to:
- Approve requests for new technology investments
- Set priorities for application development and implementation
- Monitor progress of IT projects against timelines and budgets
- Share responsibility and ownership for achieving business value
from IT investments
Formal Roles
• Some organizations have managers in integrator roles to help achieve
a strong Business/IT relationship
• An Account Manager is an integrator role that manages the
relationship between the IS organization and a particular business unit
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MEASURING OVERALL IS PERFORMANCE
Balanced
Scorecar
d
• A tool that provides an overview of
organizational performance that is not strictly
based on financial performance. In this tool,
customer satisfaction, internal processes,
innovation and learning, and financial
performance are the “balanced” metrics.
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IS MANAGEMENT IN GLOBAL ORGANIZATIONS
• Many large corporations operate globally
• Key management issue is extent to which IT is standardized
• Key region and country factors that impact global IT management:
- Country Telecommunications Infrastructure
- Legal and Security Considerations
- Language and Culture
- Time Zone Differences
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MANAGING IT OUTSOURCING
• Potential Outsourcing Benefits
- Reduced costs
- Obtaining expertise from large service provider
- Ability to expand geographically
- Flexibility to expand or reduce IT resources
- Access to new technology
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MANAGING IT OUTSOURCING
• Common Characteristics of IT Service Outsourcing
- Cost savings from leveraging different labor markets
- Long-term contracts, which are common for outsourcing
computer & communications, can be very complex and require
months of preparation prior to vendor selection and contract
negotiation
- Outsourced IT services typically difficult to bring back in-house
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MANAGING OFFSHORE IT OUTSOURCING
Offshore Outsourcing:
Outsourcing to a location outside of the country where the client is
located
Near-shore: Offshore outsourcing to a geographic location that is
close to the “shores” of the client (which can take advantage of
overlapping time zones)
Best-shore: This term refers to the fact that there are multiple options
for firms with multiple geographic sites, as they may have options to
choose among their own global locations and select the “best shore” for
a particular IT activity based on labor markets (costs and expertise),
time zones (overlapping versus those that take advantage of different
time zones), etc.
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MANAGING OFFSHORE IT OUTSOURCING
• Some key issues to consider for sourcing alternatives:
-
Support of business units that will be affected
Impact due to differences in business practices and norms
of personnel with different national backgrounds
Need for training programs due to national, cultural,
language, and location differences
Need for face-to-face communications and/or
appropriateness of available collaboration tools for a
specific IT activity
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COPYRIGHT
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photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
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Publishing as Prentice Hall
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