Introduction

1. Introduction

3. Evolutions • Business executives viewed the ICT function as the province of the technocrats primarily interested in new features with little relevance to real-world business problems; • Technology executives have often considered business managers to be shortsighted, lacking vision to exploit all that technology has to offer. • Struggle as they attempt to implement increasingly complex systems in the face of rapid change in business and technology

4. Social and Business Evolution Agricultural Information Industrial Economy Economy Economy 2000 1950 1900 Typical mathematical formula: D=B -4AC 2 Equivalent FORTRAN statement: D=B ** 2-4*A*C Telegraph Technology Evolution Photos reprinted with permission from AT&T and IBM Technology, Business, and Societal Evolution During the 20th century Corporate Information Strategy and Management Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , . Burr Ridge, IL: Chapter 1 Figure 1 - 2 McGraw - Hill/Irwin, 2002.

5. Price Performance Trends of Mainframes and PCs $/MIPs 1,000,000 8:1* 100.000 Mainframe 10,000 286:1* 1,000 PCs and workstations 900:1* 100 10 1 1980 1990 1996 Adapted from: McKe nney, J., Waves of Change: Business Evolution *Ratio of MIPs per Dollars (Mainframes:PCs) , Boston: Harvard Business School through Information Technology Press, 1995. Introduction Figure I - 1 Evolution of Computing Performance Corporate Information Strategy and Management Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan ., . Burr Ridge, IL: McGraw - Hill/Irwin, 2002.

6. Examples • American airlines • Baxter • Mrs. Field Coockies • Open Market

7. Facts • Business executives have begun to wrest control from IT executives who have failed to step up to the challenge of entering the boardroom • We see IT-enabled “virtual organizations” in which many small independent agents (or firms) band together as nodes on an information network to achieve dramatic increases in scope and scale. • Independency of time and physical location.

8. 21st Century insights: Themes • Expanded processing capacity enables convergence of voice, video and data; encourages real-time transactions and interactivity; dramatically increases connectivity and access. • The business models that dominated the industrial economy are evolving to take advantage of of the capabilities of new technologies. • ICT infrastructure becomes more standardized, modular and scalable • From cost avoidance to asset-based, strategic approach • Organizations “buy” rather than “make” IT-applications • Cooperation amongst 4 constituencies • Business executives, IT-executives, users, technology providers • Need to ensure high levels of security, privacy, reliability, and availability.

9. Theme 1:Market structure and industry dynamics Porters value chain model Administration and infrastructure Human resource management Product/technology/development Procurement Support activities Value added - cost = MARGIN Inbound logistics Operations Outbound logistics Sales and marketing Services Primary activities Well defined roles, responsibilities and relationships were governed by standardized policies, procedures and agreements

10. The Value Chain Defines Industry Structure and Relationships Evolution towards virtually integrated industries McGraw - Hill/Irwin, 2002. Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan Corporate Information Strategy and Management . Burr Ridge, IL: Introduction Figure I ., - 2

11. Theme 2: Evolving Business Models • What business are you in?  What is you business model? • Who are our customers? Our suppliers? • ASP models Corporate Information Strategy and Management Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , . Burr Ridge, IL: Chapter 2 Figure 2 - 1 McGraw - Hill/Irwin, 2002.

12. Theme 3:The Impact of IT on Strategy and Operations Reliable zero defect operations Steady stream of technological innovations High Factory Strategic Goal: Improve performance of Goal: Transform organization or core processes industry Leadership: Business unit executives Leadership: Senior executives & board Project Management: Process Project Management: Change reengineering management IT Impact on Core Operations Support Turnaround Goal: Improve local performance Goal: Identify and launch new ventures Leadership: Local level oversight Leadership: Venture incubation unit Project Management No strategic impact from IT Project Management: New venture development Low High IT Impact on Core Strategy Corporate Information Strategy and Management Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan , . Burr Ridge, IL: Chapter 1 Figure 1 - 6 McGraw - Hill/Irwin, 2002.

13. Theme 4:Prioritizing IT investments • Benefits from investments in Networked IT Infrastructure • Functionality and flexibility • Benefits from doing business on a Networked IT Infrastructure • Commerce: operating efficiency, process performance • Content/knowledge • community

14. Theme 5:Assimilation and Organizational Learning Phase 1 Opportunity Identification and investment Success Lack of Attention And commitment Phase 2 Organizational learning and adaptation Success stagnation block A narrowly focused and not marketed Phase 3 rationalization and Continuous evolution Success stagnation block B too efficiency dominated Phase 4 widespread technology transfer stagnation block C

15. Theme 6:Buy versus Make • User friendly personal software packages • Can I outsource data centers, networks, help desks, PC support • Allignment of short term and long term goals and incentives • Provisions for death and divorce

16. Theme 7: Partnership among ConstituanciesThree Eras of IT evolution Administrative framework Justification/ Benefits Target for IT use Regulated monopoly Organizational Productivity Era I Mainframe Back office Automation Free Market Individual/Group Effectiveness Era II Micro- computer Individual Shared Partnership Business Advantage Era III Internetwork Electronic integra- Tion and Learning

17. Five Questions to the Managerto be answered every six months or so. 1. Do the perspectives and skills of the IT and general management team fit the firm’s changing applications trust, operations challenges, user environment, and often shift in strategic relevance ? 2. Is the firm organized to identify , evaluate , and assimilate new IT-opportunities? In this fast moving field an internally focused, low-quality staff can generate severe problems. Unprofitable, unwitting obsolescence (from which it is hard to recover) is terribly easy here. There is no need for a firm to adopt leading-edge technology (indeed, many are ill equipped to do so), but it is inexcusable not to be aware of what the possibilities are. 3. Are the three main management systems for integrating the environment to the firm as a whole in place and implemented? These are the strategic planning system, the management control system and the project management system. 4. Are the security , priority setting, manufacturing procedure , and change control systems in the IT operations function appropriate for the role it now plays in the firm? 5. Are organization structures and linking mechanisms in place that will ensure informed senior management on IT-evolutions such that IT is aligned with the needs of the company?

18. Investing in ICT If you think good information systems are expensive, try without them !

19. Company • company not the same anymore • information system became strategic • quality requirements finally stated • management at all levels involved • Global knowledge management

20. IT - departments • Not the same anymore • much larger action radius • role of the central system has changed • hardware within the budget of a department • required knowledge not pure technical anymore

21. User • Not the same anymore either • not doing his first IT-project • got some computer training • has his own preferred packages • wants to build his own little system • doesn’t want to be forced into a system • wants to be involved in the development

22. Nolan evolution of IT-usage Four stages of DP growth: maturity control contagion initiation

23. NOLAN phases Stage Initiation contagion control maturity orientation cost reduction new functions moratorium database inquiry organization where first used dispersed central controlled distributed manager operations manager middle manager middle manager director management view lax selling controlling a resource applications supporting diversification databases end-user computing control little very little strong normal user involvement interviews , manuals PC's project groups transparent

24. Success of 21st Century Company Immediate availability of the right information on the right moment in time • Continuous scan of environment • Learning company • Knowledge base • Immediate reaction • Zero Latency Company • Flexible organizational structure of independent cells • virtual company Corporate Information Manager Depends on:

25. Goals and Requirements Information as a resource Zero Latency E-commerce Flexibility Efficiency Knowledge Management Partnerships Diversity Added Value Enabling Technologies Workflow Inter(tra)net WEB Data Mining Secure Payments Data Warehousing Databases, ERP Telecom, broadband Development environments XML System management Goals and Technologies

26. Citation There is nothing more difficult to plan , more doubtful of success, nor more dangerous to manage than the creation of a new system. For the initiator has the enmity of all who would profit by the preservation of the old system and merely lukewarm defenders in those who would gain by the new one. Machiavelli, 1513