Part 1 – Leadership issues

1. Part 1 – Leadership issues MS kap. 2

2. Leadership MS kap. 2

3. Information systems management • A part of the leadership team: • IS (Information System)/IT leadership • CIO (Chief Information Officer) • CEO (Chief Executive Officer) • SMEs (Small and Medium Enterprises): • Often no IT department, or perhaps only a few positions to maintain equipment • IS leadership has to be performed by the company management, often in cooperation with outside consultants MS kap. 2

4. Managing the IS organization • Newer IT trends: • Distribution of systems to end users • More knowledgeable users. • Better ”off-the-shelf” products • Improved techniques for development, improved tools. • Outsourcing by the use of an ASP (”Application Service Provider”.) MS kap. 2

5. From old to new tasks • Traditional tasks such as running and maintaining equipment disappear or are reduced • New, often more strategic tasks, emerge • Also applicable to IT-consultants: • system development is still an important job, but • the most important task is to be able to see what the company needs! MS kap. 2

6. MS kap. 2

7. The role of the CIO (Chief Information Officer) • Understand the company: its markets, business ideas, competitors, challenges… • Let the IT department offer good service • Increase the IT maturity level in the company, education, infrastructure… • Define visions of the future, let the company understand that IT is an important factor in making the company more competitive • Implement the IS-architecture. • Develop and maintain a contact network to management, suppliers, customers, experts… MS kap. 2

8. Understanding the business • Establish project teams to study the marketplace. • Concentrate on lines of business. • Sponsor weekly briefings. • Attend industry meetings with line executives. • Read industry publications. • Hold informal listening sessions. • Partner with line executives. MS kap. 2

9. The market • The company’s history • Current industry environment • Business ideas • The competitors (strength and weaknesses) • External constraints (regulations, …) • Resources MS kap. 2

10. Lines of business • Focus on each line (e.g., Molde College: B.Sc. studies, master studies, doctoral studies, research) instead of looking at the whole organization. • The market, the customers, the technology are line-oriented • Many SME companies have only one “line” MS kap. 2

11. For each line ask the following questions: • Are we organized to support this line? • Do we have an ”account manager” responsible for this line? • Do we have someone within that line of business who oversees IT activity? • Do we have a sponsor here? • Do we have the attention of the line’s management? • Does the line of business offer an opportunity to use systems in new ways? • As consultants for SMEs we can ask the same questions! MS kap. 2

12. Important figure MS kap. 2

13. Systems development • Listen to users: • Many problems can be solved with very moderate effort (hours, days) • With prototyping and modern development tools it is possible to solve many times within weeks or months • Make realistic time prognosis and budgets for large projects MS kap. 2

14. For the consultant in an SME: • Catch the environment in the company (structure, dynamic or static, competitive or not, safe or uncertain future, entrepreneurial or not…) • Focus on strategy and business ideas • Understand the market, the competition, technology, type of company • Identify and analyze problems • What is the competence level of the employees – talk to them in their language • Define IT needs • Understand what resources are available • Risk analysis • Work with central people in the organization: foremen, division managers, IT-department (if any), and NECESSARY: • top management! MS kap. 2

15. Our role as consultants • Show willingness to listen and to understand • Solve real problems • Start with the problem that are easiest to solve • Be modest, underselling is better than overselling • Deliver good results within time limits and budget constraints • Implement if necessary • Give guarantees, take risks on your own account? • Work hard if necessary • Establish confidence with users MS kap. 2

16. Vision for the future • Where do we wish to go? • Important: "If you don't know where you're going, it doesn't matter which way you go." (Lewis Caroll, Alice in Wonderland) • Examples: • ”The customer shall have the packet by 09.00 tomorrow” (Federal Express) • ”The customer shall be able to satisfy his insurance needs by one phone call” (USAA - insurance) • Any salesperson can order an elevator in a day (OTIS Elevator) • ”By the end of the decade, we will put a man on the moon” (John F. Kennedy) • ”I have a dream” (Martin Luther King, Jr.) • US: Both “mission” and “vision” MS kap. 2

17. Mission statement (Univ. of Michigan) • Mission StatementThe mission of the University of Michigan is to serve the people of Michigan and the world through preeminence in creating, communicating, preserving and applying knowledge, art, and academic values, and in developing leaders and citizens who will challenge the present and enrich the future. MS kap. 2

18. Vision statement (univ. of Michigan) • Vision StatementAs we enter the twenty-first century, the University of Michigan intends • To be a source of pride for all the people of Michigan and have a place in the heart of every member of the University community. • To have a place in the dreams of every potential member of the community of students, staff, and faculty. • To be recognized as a university that honors human diversity. • To be a scholarly community in which ideas are challenged, while people are welcomed, respected, and nurtured. • To be an institution whose environment fosters creativity and productivity among all faculty, staff, and students. • To occupy a position of unique leadership among the nation's universities in research and scholarly achievement. • To be a community whose members all share responsibility for supporting its mission and receive recognition for their contributions. MS kap. 2

19. How to develop a ”mission statement” • A goal or direction, what do we want to achieve • Business ideas (how shall we reach this goal) • Value basis (what do we believe in) • Example: At the Developmental Studies Center we develop, evaluate, and disseminate programs [business] that foster children's ethical, social, and intellectual development [purpose]. While nurturing children's capacity to think skillfully and critically, we also strive to deepen children's commitment to prosocial values such as kindness, helpfulness, personal responsibility, and respect for others - qualities we believe are essential to leading humane and productive lives in a democratic society [values]. MS kap. 2

20. Vision • Important – we agree on where we are going (direction, inspiration, understood by everyone) • A vision is more general than a strategy, and can therefore be kept even if the world change: • Tactics: How to win the battle • Strategy: How to win the war • Vision: What we want to achieve by winning the war. • Mission: Why we want this • Should be operative (compare Federal Express and Univ. of Michigan) MS kap. 2

21. How to develop a ”vision statement” • Start with dreams, intuition, creativity • Alt. 1: Start with the current situation: what is bad, what is good, how can we improve • Alt. 2: Try to look into the future: what are the challenges, paradigm shift, ”disruptive technologies” • Brainstorm process • Time horizon: 5-10 years • This is not team work, but a central task for the management • The vision must be “sold” to the employees. Everybody has to be told that this is important. MS kap. 2

22. Vision for IT • IT will be an important competitive factor for many institutions • It should therefore be a part of the vision • E.g.: • A bank: The challenge is to let our bank be the leading Internet based bank in Norway, letting the customers perform all standard bank services over the net. • An industry: By using IT we shall be able to deliver customized products within lead times of standard products, and with prices that are comparable to serial produced products MS kap. 2

23. OMpro (Oshaug Metall) • Vision for PPK (IT support system for propeller manufacturing): • PPK shall enable the company to produce propellers with higher quality and less costs than today • The company's competence on propellers shall be implemented within this system • The system shall be able to retrieve, store and handle all data on propellers, independent of the format that the customer use • The degree of automation should be as high as possible • Where automation is not possible the system should support users so that the task can be performed accurately and efficient. • The system should be able to communicate directly with production machinery • Employees should be able to use the system with a minimum of training. • There should be good procedures to catch and to handle error situations. MS kap. 2

24. Case: BP • Organized as business units (150 i 100 land) • Just a small hierarchy above this • There is good communication between the head office and each unit, but the units enjoy a great degree of autonomy • “Peer-groups”, advice and discussion MS kap. 2

25. BP - IT • Standards (Windows, Office, etc.) • Digital Business organization: • Strategy and leadership, in parallel with BP’s central strategy • Chief Technology Office, study ways of improving BP as a digital organization • Projects • DB should be the knowledge division when it comes to IT • Web (everything will be put on the Web) MS kap. 2

26. Case: Boeing • Produce commercial as well as military airplanes • Vision 1 (1960): ”The right part in the right place at the right time” • Problem: missing parts • Non existing parts were replaced by a ”tag” • 2.500-5000 tags used each month • IS system to remedy this situation MS kap. 2

27. Boeing: A new market situation • Reductions in defense budget (US) • Use of smaller airplanes (”hub” system) • Competition from Airbus • IS to: • Increase Boeings response to market changes (design to cost, reduced lead times, customer orientation) • Improve the service functions (after-sale-support). Documentation from design data, spare parts handling, diagnosis systems) • Streamline design and production process MS kap. 2

28. Boeing: Vision 2 (1980) • Improved information flow • To build an airplane is an information process! • Every step in the process (design or production) give more information • ”Virtual production line” • Breaking apart the organizational structure to allow free flow of information over organizational borders • Streamlining processes before automating MS kap. 2

29. Boeing: Vision 3 (-2010) • Strategic Business Process Architecture • A study showed: • The cart before the horse (IT controlled the business processes, not the opposite) • Clear vision for IT (not for the business ideas) • Important questions: • What kind of business processes should we use? • What kind of information do we need? • How are the processes linked to the information? • How do we handle data? • What hardware and software do we need? MS kap. 2

30. Boeing: New IT architecture MS kap. 2

31. Boeing: Vision 2005 (www.boeing.com/vision) • People working together as a global enterprise for aerospace leadership • Detailed customer knowledge and focus. We will seek to understand, anticipate and be responsive to our customers' needs • Large-scale systems integration. We will continuously develop, advance and protect the technical excellence that allows us to integrate effectively the systems we design and produce. • Lean enterprise. Our entire enterprise will be a lean operation, characterized by the efficient use of assets, high inventory turns, excellent supplier management, short cycle times, high quality and low transaction costs. MS kap. 2

32. To day (About us) • Boeing is the world's leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft, with capabilities in rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles and advanced information and communication systems. Our reach extends to customers in 145 countries around the world, and we are the number one U.S. exporter in terms of sales. • Boeing has a long tradition of aerospace leadership and innovation. We continue to expand our product line and services to meet emerging customer needs. Our broad range of capabilities includes creating new, more efficient members of our commercial airplane family; integrating military platforms, defense systems and the warfighter through network-centric operations; creating advanced technology solutions that reach across business units; e-enabling airplanes and providing connectivity on moving platforms; and arranging financing solutions for our customers. • Headquartered in Chicago, Illinois, U.S.A., Boeing employs more than 153,000 people in more than 67 countries. This represents one of the most diverse, talented and innovative workforces anywhere. More than 83,800 of our people hold degrees--including more than 28,900 advanced degrees--in virtually every business and technical field from more than 2,800 colleges and universities worldwide. Our enterprise also leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers worldwide. • Was a ”mission” and ”vision” statement to general, just so many nice words? MS kap. 2

33. IS architecture • IS-architecture: • How is the information organized in a company? • En IS-architecture cover: • What IS systems do we have? What databases?Do they interchange data? Hoe? • What computers do we have? Other equipment?Networks? • What standards do we use? • Who is responsible for what in the IS-architecture? • How do the IS-architecture support the goals of the organization, -strategies, -processes etc? MS kap. 2

34. Implementing an IS architecture • Modern organizations are complex – can IT be used to control this complexity? • Improved communication between people within and outside of the organization (ref. Boeing) • Removing intermediates, flatter structures • Organize information for simpler access • Support goal-oriented activities • Automate • Web technology important (Intranet, Internet) • More ”business” directed than technological • We need support from the executives MS kap. 2

35. Future tasks for the IT-department • The five waves of innovation: • 1. Reducing costs. • 2. Leveraging investments. • 3. Enhancing products and services. • 4. Enhancing executive decision making. • 5. Reaching the consumer (B2C, Web, Internet, B2B) MS kap. 2

36. Waves of innovation B2B MS kap. 2

37. The SABRE system (classical example) • Wave 1 and 2 (ca 1965): • Booking system for American Airlines (Costs: > 2 billion 2005-dollar.) • Wave 3 (from 1976): • Terminals in travel agencies, booking also for other airlines… • Wave 4 (78-79): • Expanded to encompass hotels and car rental. • Wave 5 (1980-årene): • AAdvantage — frequent flyer program • Customer database to support strategic decisions. • EAASY SABRE over net (1996 on the Internet, travelocity.com). • Strategic alliances with Citibank and MCI. • e-savers • A separate company (separated from AA due to thrust regulations) MS kap. 2

38. The future of the IS department? • 4 functions: • Managing operations (servers, net, databases) • Systems (development, maintenance) • Development of an IS architecture (strategy, framework) • Identify needs, what the company needs to improve its competitiveness MS kap. 2

39. 4 major IS activities MS kap. 2

40. The squeeze on traditional IS activities? MS kap. 2

41. Roles for IS MS kap. 2

42. IS Governance • Driving innovation • Managing change • Supporting infrastructure MS kap. 2

43. Task for an IT consultant in an SME • Develop IT strategy (often also participating in defining an overall business strategy) • Define a systems architecture • Find areas where IT can have a strategic significance • Monitor competitors, customers and suppliers • Analyze, selecting and installing systems (”broker”) • Develop prototypes and system specifications • Help users to employ the systems • These are iterative, continuous tasks MS kap. 2

44. Case: Oshaug Metall AS • 40 employees, mold and machine propeller blades • for the world market • Business idea: Handle all types of orders, independent of complexity, secure delivery, competitive prices MS kap. 2

45. My task: • Develop IT strategy • IT to improve efficiency • IT to improve quality • IT to reduce delays • IT for better contact with customers • IT to be able to handle complex orders • IT for better leadership • IT for a more flexible company • Until now their advantage has been in their knowledge of the production process (molding, machining), but their use of IT is becoming more and more important in their effort to be competitive. MS kap. 2

46. Oshaug Metall: The company • Management understand the importance of IT • Management are directly involved in the IT process • A dynamic company, non-bureaucratic, willing to take calculated risks • Willingness to change processes and methods, to try new ways of doing business • Employees are motivated to do a better job, see this as their best possibility of maintaining their jobs in a competitive market • New technology also in other areas than IT (machinery, etc). MS kap. 2

47. Oshaug: Systems • OM2000: Administrative system • All data on orders and models • Process support (molding, delivery, material control) • Documentation • e-Business functionality • PPP: Planning system • Advanced algorithm to make an effective production plan • OmPro/CMMPPK: • System for ISO control of propellers, best-fit algorithm • Electronic transfer of propeller data • Integration between proprietary programs and standard programs (e.g. OM2000 and Visma) MS kap. 2