CHAPTER 15 M ANAGING THE I NFORMATION S YSTEMS F UNCTION

1. CHAPTER 15 MANAGING THE INFORMATION SYSTEMS FUNCTION

2. THE CHALLENGES FACING ISLEADERSHIP • Rapid technological change • Exploding applications and data • Growth in business management understanding of technology • Frequent external shocks Page 582-583

3. MANAGING THE ASSETS IN AN ISORGANIZATON • IS leadership must manage these organizational assets: • Human resources • Organizational data • Physical infrastructure • Applications portfolio Most important asset in the IS organization is its people! Page 583-584

4. MANAGING THE ASSETS IN AN ISORGANIZATON Developing Human Resources • Provide specialized IT training for IS professionals and others Page 584

5. MANAGING THE ASSETS IN AN ISORGANIZATON Possible IS Management Positions Figure 15.1 Selected IS Management Positions (1 of 3) Page 584-585

6. MANAGING THE ASSETS IN AN ISORGANIZATON Possible IS Management Positions Figure 15.1 Selected IS Management Positions (2 of 3) Page 584-585

7. MANAGING THE ASSETS IN AN ISORGANIZATON Possible IS Management Positions Figure 15.1 Selected IS Management Positions (3 of 3) Page 584-585

8. MANAGING THE ASSETS IN AN ISORGANIZATON Improving the Physical Infrastructure • Develop policies and procedures to manage an IT system’s physical assets – computer hardware and networks Page 584

9. MANAGING THE ASSETS IN AN ISORGANIZATON Improving the Physical Infrastructure • Infrastructure management issues addressed in policy statements: • Location • The workstation • Supported operating systems • Redundancy • Supported communications protocols Page 586-588

10. MANAGING THE ASSETS IN AN ISORGANIZATON Improving the Physical Infrastructure • Infrastructure management issues addressed in policy statements (cont.): • Bandwidth • Response time on the network • Security versus ease of access • Breadth of network access • Access to external data services Page 586-588

11. MANAGING THE ASSETS IN AN ISORGANIZATON Managing the Applications Portfolio • Most companies cannot operate without software applications – they are critical assets • Just as physical infrastructure, software portfolio needs managed as an asset Page 588

12. MANAGING THE ASSETS IN AN ISORGANIZATON Managing the Applications Portfolio • A company must know: • What software it owns • Where it is located • What it does • How effective it is • What condition it is in Page 588

13. MANAGING THE ASSETS IN AN ISORGANIZATON Managing the Applications Portfolio • Policies and guidelines must exist for the development and maintenance of IS applications • Maintenance should be treated as an activity necessary to preserve an asset’s value Page 588

14. MANAGING THE ASSETS IN AN ISORGANIZATON Managing the Applications Portfolio • Application portfolio policies must address: • Assumed user • Application location • Process-driven or data-driven design • Evaluation criteria for new applications systems Page 588-590

15. Process-Driven Design Collects, manipulates, and stores only data needed to operate a particular process Most often used in the past Data-Driven Design Concentrates on all data needed and collects into database Each application accesses common database for needed information MANAGING THE ASSETS IN AN ISORGANIZATON Managing the Applications Portfolio Page 589-590

16. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES • Ten key issues: • Developing effective change management system (Chapter 12) • Ethical use of IT (Chapter 16) • Agreeing upon the role of the IS organization • Selecting effective IS leadership • Creating an active partnership with business managers • Determining an outsourcing strategy • Designing an equitable financing system • Deploying global information systems • Designing an appropriate IS organization and governance system • Ensuring regular performance measurement Page 590-591

17. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 1. Agreeing Upon the Role of the IS Organization IS organization: • Role is continually changing • Needs a mission statement • Must be future-oriented while fulfilling today’s requirements • Must be aligned closely with business activities Page 588-590

18. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 1. Agreeing Upon the Role of the IS Organization IS organization is expected to: • Demonstrate business understanding and maintain close communication with business managers • Respond quickly to changing business needs • Help reengineer business processes to be more customer responsive • Ensure business can participate in e-commerce • Keep final customer in mind • Build systems that provide direct customer benefit • Help business managers make better decisions with information • Use IT for competitive advantage • Help business integrate IT Page 591

19. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 1. Agreeing Upon the Role of the IS Organization IS organization is also expected to: • Be steward of organization’s IT resources • Deploy IT resources throughout the organization • Facilitate productive use of resources • Lead development of information vision and IT architecture • Communicate vision and architecture • Maintain managerial control over important information resources • Administer corporate data • Make current and new IT available at lowest possible cost • Help business managers know and use technology • Develop partnership with business managers to exploit technology Page 592

20. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 2. Selecting Effective IS Leadership Chief Information Officer (CIO): • A member of executive management team • Needs mix of business and technical knowledge • Guides and unifies entire organization’s IT resources • Masters understanding of business, products, vendors, sales channels, customers, and competition • Recognize IT advantages and where to apply • Hires good people and delegates • Works with executive management team to achieve competitive advantage Page 593-594

21. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 2. Selecting Effective IS Leadership Senior IS Management Issues: • Improving data and IT planning, especially linking IS to the business • Gaining business value through IT • Facilitating organizational learning about and through IT • Refining the IS unit’s role and position • Guiding systems development by business managers • Managing organizational data as an asset • Measuring IS effectiveness • Integrating information technologies • Developing systems personnel Page 594-595

22. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 3. Creating an Active Partnership with Business Managers Partnership–a critical strategy based on sustaining a long-term relationship between IS and business management Page 595

23. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 3. Creating an Active Partnership with Business Managers IS steering committee or advisory board used to: • Ensure frequent interaction • Set priorities • Check progress • Allocate scarce resources • Communicate concerns • Provide education • Develop shared responsibility Page 595

24. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 4. Determining an Outsourcing Strategy Outsourcing – hired outside services to perform some of a company’s IS operations Application service providers (ASPs) – provide total systems to organizations, ranging from competitive intelligence systems to broad ERP applications Page 595

25. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Outsourcing: • Allows an organization to pay only for what it uses • Trend might relate to the position of the CIO • Popular, largely due to: • Fast pace of technological change • Dissatisfaction and costs related to past in-house services • Must be both a remedy for service failures or costs and a strategic choice • Should not be used for strategic information systems with security or privacy issues Page 596-597

26. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Key factors in selecting an outsourcing vendor: • Vendor reputation • Quality of service • Flexible pricing Page 596-597

27. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 5. Designing an Equitable Financing System Typical measures used to track IT costs: • Total IT budget as percentage of total organization revenues or income • Total IT budget as percentage of total organization budget • IS personnel costs as percentage of total organization professional personnel salaries and wages • Ratio of hardware and software costs to IS personnel costs • Costs for IT hardware and software per managerial or knowledge worker Page 598

28. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 5. Designing an Equitable Financing System Why is it hard to measure IT costs? • Some IT costs are hidden • No relationship to benefits included in these measures • Benefits may happen after development costs occur Page 598

29. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Measuring Benefits • No simple way to measure value added benefits of IT • Can track IS performance measures over time Page 598

30. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Controlling IS Costs • Use IS organization’s budget • Divide costs: • Personnel • Equipment and software • Outside services • Overhead Page 598

31. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES Chargeback Systems IS chargeback process – places control of IS spending with business managers, and is used to better understand true costs Page 598

32. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 5. Designing an Equitable Financing System Why use a chargeback system? • Assign costs to those who consume • Control wasteful use of IT resources • Overcome belief that IT costs unnecessarily high • Provide incentives using subsidy • Change IS to be more business driven • Encourage managers to be knowledgeable consumers Page 598

33. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 5. Designing an Equitable Financing System Successful chargeback systems must be: • Understandable • Timely • Controllable • Accountable • Clearly linked to benefits • Consistent with IS and organizational goals Page 598

34. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 6. Deploying Global Information Systems Region and country issues influencing global IT management: • Country telecommunications infrastructures • Legal and security considerations • Language and culture • Time zone differences Page 600-601

35. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 6. Deploying Global Information Systems Key trends of global outsourcing: • Offshore development centers – permanent offshore presence • Near-shore sourcing – outsourcing to countries close to home and overlapping time zones • Multisourcing – relying on multiple service providers in a number of companies, based on price and skills Page 602

36. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 6. Deploying Global Information Systems Global team manager traits: • Multiculturalist • E-facilitator • Recognition promoter • Internationalist • Traveler Page 603

37. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES • Designing an Appropriate IS Organization • and Governance System Figure 15.8 Classic IS Organization Structure Page 603-604

38. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES • Designing an Appropriate IS Organization • and Governance System • Types of IS Organizational Design: • Centralized – IS applications and resources housed, managed, and controlled centrally • Decentralized – business units have complete control of their own IS resources • Federal – attempt to achieve benefits of both centralized and decentralized • Customized – mixed design in large enterprises where each division determines best design for that division Page 604

39. Centralized Decentralized Federal Customized Figure 15.9 Common Designs for the IS Organization Page 605

40. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES • Designing an Appropriate IS Organization • and Governance System • Organization design depends on: • How rest of business is organized • Type of customer markets, products, and geographical spread • Role of IT within the organization • Reporting level of most senior IS leader • Types of technologies managed by IS organization Page 605

41. Figure 15.10 Four Types of IS Governance Mechanisms Page 606

42. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 8. Ensuring Regular Performance Measurement • Necessary for internal customers to regularly evaluate IS organization • Need to show if promised cost savings are realized • Required: • Agreement on measurable criteria • Metrics to judge work quality Page 606

43. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 8. Ensuring Regular Performance Measurement • IS Evaluation Criteria • Meeting business objectives • Responding rapidly and economically to new needs • Expanding business or services • Developing an architecture and plan • Operating reliable and efficient technology resources • Focusing on the customer • Providing quality IS staff • Reducing size of backlog • Satisfying users • Adopting new technologies Page 607 Figure 15.11 IS Evaluation Criteria

44. INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES 8. Ensuring Regular Performance Measurement • Other measures to evaluate IS performance: • Service level agreements with internal business units can be used to evaluate IS performance • Annual surveys for each major system • User satisfaction surveys Page 608