Organizing and Leading the ICT-function

1. Organizing and Leadingthe ICT-function

3. Responsibilities • Project management • Direction Committee • Steering Committee • Project Group • Working Groups • Management of the IT-department • Centralized organization • Decentralization

4. The Direction Committee • The strategic plan • Set up a steering committee • Provide facilities The responsibility of the management :

5. The Steering committee - group of representative top level managers - meet a few times a year • Define Basic Options • programming environment • tools • hardware • Priorities • Budget • Formal acceptance Responsibilities of the steering committee:

6. Project group Created by the steering committee for the lifetime of the project Middle-managers and IT-people meeting frequently Directed by a Project Leader Responsibilities : • daily system follow-up • budget follow-up • create ad-hoc working groups if needed • report to steering committee Project meeting reports are crucial

7. Working groups • Ad-hoc working groups • created to solve a specific problem or to make a specific report • disappear after completion of the job • Permanent working groups • cooperate in all projects • very specialized ( security, ergonomic, ... )

8. Central IT - department department-1 Software devel. Operators department-2 DBA job-preparation . . telecom librarian . department-n. operating system Production ctrl. IT-MGR Finances secretariat Function Analysis Technical units Operations Quality assurance Security Help desk Training

9. IT Dominance Too much emphasis on DB and system maintenance New systems must fit old data structures Service requests require system study and benefit analysis Standardization dominates IT designs/constructs everything Little user control on development IT specializing in technical aspects, not in user business IT spends 80% on maintenance IT thinks they control everything Users express unhappiness General management not involved but concerned Development portfolio under IT control User Dominance Too much focus on problem IT feels out of control Explosive growth of numbers of systems and related staff Multiple, often changing suppliers Lack of standardization and control over data and systems Hard evidence of benefits nonexistent Soft evidence not organized Technical advise of IT not sought or considered irrelevant Buying services from outside Networks not designed for corporate needs Little technology transfer Growth in duplication of technical staff Rising communication cost because of duplication Duplication of effort and input Implications of too much Dominance

10. Pressure towards user dominance • Pent-up user demand • large backlog (3-5 years) due to sustained maintenance • first created by conversion to data - program separation • staffing problems due to high turnover • user-developed systems speed up the process of obtaining the needed service • decentralized IT helps educate users, reduces communication problems • rotation between IT and non-IT jobs possible • decentralization facilitates user interface with network • Competitive and service growth in IT market • specific applications marketed to end-user managers • stand-alone local hardware platforms seem attractive to users • seen as operationally simple ( no airco , one operator,...) • no cumbersome project proposal to be written and defended • projects developed under user control

11. Pressure towards user dominance • User control • regaining control over operations is very important for users • development • control over system development priorities • own staff or self selected software houses • mistakes made by local group are more easily accepted • successes are topics of conversation • maintenance • users get control over maintenance priorities • assumption is that maintenance will not be a problem • operations • not dependent on corporate computer scheduling • Fit with organization Benefits can lead to less data hygiene and less regard for control

12. Pressures toward IT control • Staff professionalism • specialized personnel supporting small divisions • graying of IT , reason for outsourcing : easier with central IT • developing and enforcing standards of IT management • documentation, project management skills • decentralization may drop professionalism • Feasibility study concerns • users can hardly estimate growing processing requirements • user feasibility study focus on first application • more susceptible to acquire products from unstable vendors • not enough concern to export developments to other depts

13. Pressures toward IT control • Corporate Database System • ability to manage and control data flows • data integrity and consistency • abstraction of data • ensure appropriate security • Fit with corporate structure and strategy • centralized IT development’s role clearest in organizations with a centralized planning and operational control • decentralized structure increases cost of central IT • centralized development groups have an explicit marketing activity ( especially for multinationals ) • Cost analysis • takes into account the interest of the whole company • software costs 75-85% of total cost for a customized system • decentralization avoids un-understandable bills but saving are false

14. Coordination and location of IT policyIT responsibilities • procedures for comparison of own development and outsourcing • develop standards for project control and documentation • define a process for forcing adherence to these standards • inventory of installed or planned information services • develop standards that establish: • mandatory communication standards • standard programming environments for used platforms • corporate data dictionary • auditing procedures for locally developed systems • identify and provide IT development staff career paths • establish marketing efforts for IT support • prepare checklist with questions concerning HW/SW acquisition • identify and maintain relationships with preferred system suppliers • Education programs for potential users • establish ongoing review of systems to avoid obsolete systems

15. Coordination and location of IT policyUser responsibilities To assist in orderly implementation of new IT services, and understand their use, cost and impact • understand the scope of all supporting IT activities, including charge-out • realistically appraise personnel investment for development and operation • ensure comprehensive user input for for all IT projects • nature of service, process of introduction, training • create realistic IT-user interface , consistent with strategic relevance • periodical audit of the adequacy of: • system reliability standards • performance of communication services • security procedures • participate in the development and maintenance of an IT plan

16. Coordination and location of IT policyGeneral management support Because of the need to link IT to business separation of: • IT operations ( e.g. reporting to head of administration ) • IT planning (e.g. IT policy group reporting to head of research) • ensure balance between IT and user inputs via eventual personnel and organizational transfers and via a steering committee • develop comprehensive corporate IT strategy • manage inventory of hardware and software resources , including standard policy with vendors • facilitate development and evolution of standards for operations and development , and make sure that they are applied • facilitate transfer of technology between units • encourage technical experimentation • develop an appropriate planning and control system to link IT firmly to the company goals

17. ICT Management Process

19. Results control architecture 1. Unallocated cost center • stimulates user requests and experimentation • easy for IT to sell services • risk of irresponsible user requests for services • no competitive pressure on IT • keep free of charge but inform users about cost

20. Results control architecture2. Allocated cost center and charge-out Stimulates honestety in user requests in later phases • Allocation problems • charges compared with outside offerings : misleading • nothing achieved by 100% charge-out ( create barrier) • unpredictable , unstable charges for users ( machine load ) • very complex systems • Desirable characteristics • understood by users ( better on output than on real usage) • perceived as fair • IT maintenance and development charges • estimate costs by IT department • procedure for reestimating • time and material basis

21. Results control architecture3. Profit Center Puts inside service at same footing of an outside one • Pressure on IT for cost efficiency • IT must market itself • Excess capacity encourages sales of services to outside companies • those sales are unprofitable • exited by hard outside dollars • because of shared files, user have not always the option of going outside ( not subject to normal market forces) • leads to higher users costs because of profit figure

22. Results control architecture4. Transfer Pricing • IT operations priced in end-user transaction terms • IT development and maintenance as fixed-price contract Cost-based price • lowest cost from user’s perspective • complex , difficult to understand charges Market-based price • difficult to find comparable products Dual Transfer Price allows IT and user to be motivated • users are charged items at direct or full cost • IT is allocated revenue based on standard cost of services. IT revenues via selling more services or better cost efficiencies • difference posted to an overhead expense account Negotiated price difficult in IT because of non-equal partners

23. Financial reporting processBudget process • must involve senior mgt , IT mgt , user groups • output includes: • establish planned service levels • cost of central operations • amount of internal development and maintenance support • external services • derived from review of : • existing services • approved application development portfolio • user desire for new services • need for appropriate control on purchased IT services • dialog helps generate a user understanding of IT goals

24. Non-financial reporting process • preparation of six-month surveys • identify problems • provide a benchmark to measure progress • to show concern of IT for about user perception of service • Staff reports • turnover trends • sensitivity of leadership • salary levels • workplace climate • Other reports • trends in network uptime • ability to meet schedules on batch jobs • average response times