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Leadership in the networked enterprise

Leadership in the networked enterprise. MBA 501 Week 4. Today’s class will cover. The main IT functions in an organization A maturity model and delivery options for these IT functions The changing role of the CIO / IT leadership .

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Leadership in the networked enterprise

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  1. Leadership in the networked enterprise MBA 501 Week 4

  2. Today’s class will cover... • The main IT functions in an organization • A maturity model and delivery options for these IT functions • The changing role of the CIO / IT leadership

  3. Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  4. 5 stage IT Maturity model: Not all IT functions are at the same stage of development or maturity Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  5. 5 stage IT Maturity model: Stage 1 Unique • A UNIQUE IT function is one that provides strategic or proprietary advantage and benefit • These IT functions seek to differentiate the organization in the marketplace • Examples: business analysis, application integration, or knowledge-enabling business processes. • Such functions depend on familiarity of the organization’s internal systems combined with in-depth knowledge of the business. Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  6. 5 stage IT Maturity model: Stage 2 Common • A COMMON type of IT function caters to common (i.e., universal) organizational needs. • little ability to differentiate the business but it provides a necessary / critical, component (e.g., financial systems, HR). Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  7. 5 stage IT Maturity model: Stage 3 Standardized • STANDARDIZED IT functions not only provide common tasks/activities but adhere to a set of standards developed and governed by external agencies. • Examples include billing/payment functions, cheque processing, forms management, facilities management, disaster recovery planning) Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  8. 5 stage IT Maturity model: Stage 4 Commoditized • COMMODITIZED functions are considered commodities similar to oil and gas. Once attributes are stipulated, functions are interchangeable and indistinguishable (i.e.,any barrel of oil will suffice). There may be many providers of the function. • Examples: application service providers (who deliver standard applications developed by third party vendors to client firms without customization), network services, server farms, storage capacity, backup services etc Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  9. 5 stage IT Maturity model: Stage 5 Utility • A UTILITY function2 is a commodity (such as electricity) delivered by a centralized and consolidated source. • Examples of utilities include internet service providers (ISPs) as well as other telecommunication services (e.g., bandwidth on-demand). Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  10. IT functions ranked by maturity stage Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  11. Delivery options for IT functions Delivering IT functions: a decision framework J. D. McKeen & H. Smith Communications of AIS; 2007 Issue 19, p 725-739

  12. The maturity model is important to next week’s topic too, as it is a key consideration in the decision whether to build or buy when considering a technology acquisition. • This week we will use it as the background to the changing role of the IS function and its senior management.

  13. The changing role of the IS function and its leadership

  14. The Office of the CIO • Chief Information Officer (CIO) • Top management, customers, suppliers, strategy • Chief Technology Officer (CTO) • IT planning, architecture, new technologies • Chief Operations Officer (COO) • Daily IS operations • Chief Project Officer (CPO) • Projects management McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  15. The changing role of the CIO • Responsibilities of the role have changed over the years as technology and its role in the enterprise has changed • Growing demand for IT managers in the U.S. and worldwide. • Management of IT in past 50 years has drastically changed. • Basic functioning  cost reduction  decision support  inter-organizational supply-chain and “business eco-system” • Onus on top executives to provide IT vision and leadership. McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  16. The changing role of the CIO – business or technology? • Today’s CIO and their evolving, future role – Enterprise CIO Forum

  17. Escalating Benefits of IT • Changing technology and evolving IS role since 1950s. (a parallel process) • “Waves of Innovation”: • Wave 1: Reducing costs (1960s) • Wave 2: Leveraging investments (continuous improvement) (1970s) • Wave 3: Enhancing products and services (1980s) • Wave 4: Enhancing executive decision-making (late 1980s) • Wave 5: Reaching the consumer (1990s) • Wave 6 (new): Leveraging partnerships through supply chain management or other forms of collaboration (late 1990s) McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  18. Escalating Benefits of IT (cont’d) McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  19. The SABRE System (American Airlines) • Case example of “Waves of Innovation” • Evolution: Handwritten reservation system (1950s) to Web-based system (2000s). • Waves 1 and 2 (1960s) • SABRE (CRS) built to reduce costs of making airline seat reservations. • ROI on staff expenditure. • Wave 3 (1970s) • System enhanced to span organizational boundary for travel agents (provide direct access to CRS) McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  20. The SABRE System (American Airlines) cont’d • Wave 4 (late 1980s) • Revenue Management System (provide decision support to managers) under SABRE Airline Solutions (new division). • Wave 5 (1990s) • System extended to provide direct Web access to customers (CRS, flight information, movie etc.) • Wave 6 (2000s) • Sabre (small letters) spun off from AMR in 2000, leveraged partnerships and technology. McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  21. The SABRE System (American Airlines) cont’d • Throughout waves of innovation, strong IS involvement was crucial. • Evolving with changes in technology • From money-making to extending organizational boundaries to spinning off. McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  22. SABRE case questions • How has the function of the IS organization changed over time? • What is the function of the IS organization now? • Were these changes due just to technological advances or to something else? • What skill set is needed to be an IS leader now?

  23. Nicholas Carr • The Big Switch…..transforming the role of IT within the organization: • the era of the cloud (video 30 minutes)

  24. Traditional Functions are Being Nibbled Away • Traditional set of responsibilities for IS • Managing operations of data centers, local and remote systems and networks • Managing corporate data and legacy systems • Performing system analysis and design and constructing new systems • Planning and integration of systems • Identifying opportunities for new systems McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  25. Traditional Functions are Being Nibbled Away cont’d • Trends that are moving traditional roles out of IS: • Distributed Systems • Migration of software applications to user areas • Ever more knowledgable users • Better application packages • Systems development to integration • Outsourcing • Based on fiscal and managerial considerations, plus technology such as cloud and utility computing McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  26. Traditional Functions are Being Nibbled Away cont’d McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  27. New Roles are Emerging McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  28. CIO Roles Today • Leading • Creating vision by understanding the business • Governing • Establishing an IS governance structure • Investing • Shaping the IT portfolio • Managing • Establishing credibility, managing IT functions, and fostering change • What are headhunters looking for in CIOs? (Computer Weekly, September 2007) McNurlin, Sprague & Bui. Information Systems Management in Practice. Pearson. 2008

  29. The changing face of the CIO • Video from INSEAD: The changing face of the CIO (Harvey Koepel and Bruno Lanvin) • IBM Study - The New Voice of the CIO (Report on the role of the CIO in midsize companies)

  30. Another view?Six decisions your IT people shouldn’t make (without senior management input) • “Each is a decision that IT people shouldn’t be making – because in the end, that’s not their job” • How much should we spend on IT? • Which business processes should receive our IT dollars? • Which IT capabilities need to be companywide? • 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? Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  31. Senior management’s role To define strategic role of IT, then decide the funding needed to achieve it Consequences of letting someone else make the decision High IT spending, but strategic gains not recognized How much should we spend on IT? Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  32. Which business processes should receive our IT dollars? • Consequences of letting someone else make the decision • Lack of focus, trying to implement too many projects at once, lack of companywide value • Senior management’s role • To make clear decisions about which IT initiatives will or will not be funded Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  33. Which IT capabilities need to be companywide? • Senior management’s role • To decide which IT capabilities can be provided centrally and which developed by individual business units • Consequences of letting someone else make the decision • Excessive technical and process standards limit flexibility, or frequent exceptions to standards increase costs Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  34. How good do our IT services really need to be? • Senior management’s role • Decide features (eg, reliability) on the basis of costs and benefits to the company overall • Consequences of letting someone else make the decision • Company may pay for service options that are not worth the cost (given company priorities) Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  35. What security and privacy risks will we accept? • Senior management’s role • To lead decision-making on the trade-offs needed in balancing risks • Consequences of letting someone else make the decision • Overemphasis may inconvenience suppliers, customers and employees. Under-emphasis may make data vulnerable Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

  36. Whom do we blame if an IT initiative fails? • Senior management’s role • To assign a business executive to take responsibility for each IT project. Measure success on the basis of business metrics • Consequences of letting someone else make the decision • The business value of the system is never realized Ross & Weill.(2002) Six IT Decisions Your People Shouldn’t Make. Harvard Business Review. Vol 80. Iss. 1

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