Building IT Leadership: Revisiting Key Issues

1. Building IT Leadership: Revisiting Key Issues BCS London May 17th 2007 Presenter: Leslie Willcocks Professor of Technology Work And Globalization London School of Economics and Political Science email: l.p.willcocks@lse.ac.uk

2. Does IT Matter? Carr, N., "IT Doesn't Matter," Harvard Business Review, Vol. 81, 5, May 2003, pp. 41-49. Friedman, Thomas, The World is Flat, Farrar, Strauss, and Giroux, New York, 2005, pages 3 to 172

3. Nicholas Carr: Does IT Matter? Harvard Bus. School Press, 2004 • IT is just a commodity: “IT is an infrastructure technology like the steam engine, railroad, telegraph, telephone” • IT is no longer a source of competitive advantage: “The core functions of IT—data storage, data processing, and data transport—have become available and affordable to all.”

4. Nicholas Carr: Does IT Matter? Harvard Bus. School Press, 2004 • Spend less. Studies show that the companies with the biggest IT investments rarely post the best financial results. • Follow, don't lead. Moore's Law guarantees that the longer you wait to make an IT purchase, the more you'll get for your money. • Focus on vulnerabilities, not opportunities. Even a brief disruption in the availability of the technology can be devastating.

5. Friedman: The Ten Flatteners • Platform Building • 11/9/89 (PC revolution: Windows) • 8/9/95 (Internet Revolution: Netscape goes public) • Work Flow Software (application protocols let computers talk to computers) • Open-sourcing (Best software is available to everyone) • Platform Use • Outsourcing (global sourcing of knowledge work) • Offshoring (moving facilities to cheapest location lowers prices, stimulates • the economy) • Supply-Chaining (eating sushi in Arkansas) • Insourcing (allows small firms to act big) • In-forming (Google, Yahoo, MSN) • Platform Enhancement • 10. The Steroids

6. Key Issues For IT Executives - 2006-7 • Top Ten Management Concerns: • 1. IT and Business Alignment • 2. Attracting, Developing and Retaining IT Professionals • 3. Security and Privacy • 4. IT Strategic Planning • 5. Project management capability • 6. Introducing Rapid Business Solutions • 7. Speed and Agility (new to top ten) • 8. True Return on Individual IT Investments • 9. Measuring The Value of IT Investments • 10. IT Governance • Note: - 70% organisations are Maturity 2/3 on alignment (out of 5) See Luftman et al. (2006) MISQE Key Issues for ITExecutives for earlier surveys

7. x = Retail (58 CIOs) x = Telco (29 CIOs) 1 1 2 3 15 4 9 5 12 6 8 8 3 2 9 5 11 7 10 4 Improving Business Continuity Planning. - • Reducing IS • complexity 6 7 Moving to a service-based org. - 10 2006 CIO Strategic Management Priorities To what extent will each of the following CIO actions be a priority for you in 2006? Ranking 2006 2005 2004 Delivering projects that enable business growth 1 1 18 Linking business and IT strategies and plans 2 2 4 Building business skills in the IS organization 3 9 1 Demonstrating the business value of IT 4 3 2 Attracting, developing, and retaining IS personnel 5 * * Applying metrics to the IS organization and IT services 6 4 14 Improving the quality of IS service delivery 7 7 3 Flexible technology infrastructure 8 * * Improving IT governance 9 10 11 Consolidating the IS organization and operations 10 8 ** * New question for 2006 ** New question for 2005 Source: 2006 Gartner EXP CIO Survey

8. Key Issues: Some Food For Thought... • Technology • Strategy • People • Structure • Governance • Eight IT Differentiators

9. Key Issues For IT Executives 2006-7 • Top Six Application and Technology Developments: • 1. Web services (new to top 6) • 2. Business Intelligence • 3. Security Technologies • 4. Business Process Management (new to top six) • 5. Customer Portals (new to top 6) • 6. Systems Integration • Other: • SOA • XML • EAI/M • Corporate performance mmt. • CRM

10. Four Domains of IT IT Hype IT Capability 'Useful' IT 'Strategic' IT Willcocks, Feeny, et al 1997

11. Key Issues: Some Food For Thought... • Technology • Strategy • People • Structure • Governance • Eight IT Differentiators

12. IT/IS Strategy Formulation:A Multiple Methodology Business plans and Goals Current System IT Opportunities ‘Bottom Up’ ‘Outside-In’ ‘Top Down’ Creative Techniques, Processes & Environment Examples Scenarios Bright Sparks & Product Champions Analytical Methodology Opportunities, Threats ‘Listen to the Technology’ Teamwork Evaluative Surveys & Audits Strengths Weaknesses Users & Specialists StrategicApplication Plan Mandatory Strategic Development Infrastructure Renewal Maintenance R&D Source: Earl, 1996

13. ‘Qualifiers’ ‘Order Winners’ Critical (Best-source: In-House/Partner) (In-House/Buy-In) Contribution to Business Operations ‘Necessary Evils’ ‘Distractions’ Useful (Outsource) (Migrate or Eliminate) Differentiator Commodity Contribution to Competitive Positioning/Core Competence Strategic IT Sourcing(Willcocks et al, 2002)

14. The Role of Organisational Architecture Organizational Architect - creates options (scenarios) - converts set of options into organizational requirements - assesses level of change required - helps refine vision - identifies organization design for vision - helps refine technology architecture Visions refined through informed dialogue Board/ CEO/ Inner Circle IT architecture refined through informed dialogue Actionable vision - organization design - technology platform IT Architects Source: Sauer and Willcocks 2002

15. Key Issues: Some Food For Thought... • Technology • Strategy • People • Structure • Governance • Eight IT Differentiators

16. CEO’s Attitude to IT • IT Vision to Transform • CIO’s Position in Organisation • Member of Top Management Team • Top Management • Team Process • Personal/Informal Culture • ‘Away Day’ Workshops Excellent Relationships • CIO’s Personal Profile • IT Knowledge/Experience • Business Loyalty/Focus • Goal Seeking • BUT ALSO • Consultative Leadership • Ideas Oriented Source: Earl and Feeny, 2000

17. Retained Core IT Capabilities Nine Core Back-office Capabilities Business and Function Vision Business Systems Thinking Relationship Builder Contract Facilitation IS Leadership; Informed Buying Contract Monitoring Delivery of Service Technical Architecture Making Process-IT work Architecture Planning and Design Vendor Development

18. Key Issues: Some Food For Thought... • Technology • Strategy • People • Structureand Governance • Eight IT Differentiators

19. The IT Function: Enormous Pressure to Change • Value for Money • Quality, Service • Time • Compliance • Social and Green Resps. Business and external Pressures User Pressures IT ? More knowledgeable AND demanding users Technology Challenges • Diversity • Distribution, Integration • Packages • Emerging technologies • Etc. Existing Systems IT Service Suppliers

20. Six Models of IT Organisation 1 Corporate Service 2 Decentralised 3 Internal Bureau and 4 Business Venture 5 Federal

21. Six Models of IT Organisation 6a Outsourced: Corporate Service 6b Outsourced: Federal supplier supplier

22. Governance Defined • “IT governance—specifying the framework for decision rights and accountabilities to encourage desirable behaviour in the use of IT.” –Weill, MISQE, 2004 • Decision rights and inputs • Desirable behaviour e.g sharing, reuse, cost savings, innovation, growth • Mechanisms – IT council, architecture office, SLAS… • Business value – responsibilities, accountabilities, metrics…

23. Stronger IT Governance Is Needed: • IT has become more important, but less under ‘control’ of the IT function • Firms face major new opportunities and risks as IT migrates outside the IT department • Complexity and ‘rogue’ behaviour need to be managed • Links to, and learning from, corporate governance • Top IT performers govern IT differently depending on objectives – asset usage, revenue growth, flexibility, ROA/profits • The business must help by: • Understanding what is possible, and not possible, in IT • Providing more explicit direction on the business approach and priorities • Disciplining its own behaviour, cooperating more • Addressing complexity head on • Being engaged in its IT governance and management responsibilities • Making some uncomfortable choices e.g on shared services/applications…..

24. Important IT Governance Concepts • IT Principles – Clarifying the business role of IT • IT Architecture – Defining integration and standardisation requirements • IT Infrastructure – Determining shared and enabling services • Business Application Needs – Specifying the business need for purchased or internally developed IT applications • IT Investment and Prioritization – Choosing which initiatives to fund and how much to spend Weill and Ross, 2004

25. Summary: Eight I.T. Differentiators • Listen to the technology; be informed by • globalization dynamics (Friedman, 2005: Moscella, 1997, 2004) • IT governed as a strategic portfolio by • relevant stakeholders (Willcocks et al. 2003: Weill and Ross, 2005) • IT led by a credible CIO, influential amongst • senior business execs. including CEO (Feeny and Ross, 2000) • Disciplined mixed sourcing strategy, management, • and delivery regime (Cullen and Willcocks, 2004: Willcocks and Lacity, 2006 • Business maturity to manage IT as • a strategic resource (Willcocks et al. 1997; Broadbent et al. 2005) • Retain specific key IT capabilities (Willcocks and Lacity 2006) • Ensure key supplier capabilities (Feeny et al., 2005) • Core organizational project management • capability (Willcocks et al., 2003) to Ensure Value for IT Spend

26. USEFUL REFERENCES 1. Willcocks, L. et al. (2003) Making IT Count: Strategy, Delivery and Infrastructure. Butterworth-Heinemann 2. Willcocks, L. and Lacity, M. (2007) Global Sourcing of Business and IT Services. Palgrave, London 3. Sauer, C. and Willcocks, L. (2002) Evolution of the Organizational Architect. Sloan Management Review, April. 4. Weill, P. and Ross, J. (2004) IT Governance. Harvard Business Press, Boston 5. Willcocks, L. et al. (1997) Managing IT As A Strategic Resource. McGraw Hill, Maidenhead 6. Earl and Feeny (2000) How to be a CEO in an Information Age, . Sloan Management Review, Winter