Chapter 1 Introduction Managing the Information Technology Resource

Chapter 1 Introduction Managing the Information Technology Resource Paula Goulding

Chapter Outline § Evolution of role of IT § Role of IT management versus other business functions § View of IT by IT executives § How to better manage IT resources § Key issues in the management of IT § Importance of successfully managing IT

Primary Purpose § IT is important and necessary for a successful organization § Successful management of IT is necessary for competitive advantage

3 Strategies for Competitive Advantage § Cost leadership – Competing with lower costs § Product differentiation – Competing with value § Product focus – Competing by restricting one’s market

IT Management Categories § Strategic – Pertinent to long-term attainment of goals and business as a whole § Tactical – Needed to achieve strategic plans and goals to produce changes for success § Operational – Process and actions that must be performed on a day-to-day basis to maintain performance level

Additional Skills of IT Managers § § § Financial Human Resource Relationship Management § Legal § § Governance Marketing Negotiating Leadership

John Rockart “The limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organization. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organization’s efforts for the period will be less than desired. ”

3 Primary Computing Eras 1. Mainframe Computer Era 2. PC Computing Era 3. Pervasive Computing

Historical View of IT § § § Initially for government/military use Businesses used for financial automation Data Processing was key function Computers were costly and large in size Not widely used

Historical View § § Cost decreased Size decreased Use of personal computers increased Business staff and IT staff began to interact § Technology issues increased § Networks, E-mail, and Internet became necessity

Role of IT § § § No longer just serves a business Integral in business strategy Impacts every area of business Complexity increases How does IT function vs. the entire organization § Responsible for the integration of information

Role of IT Today

Enabler of E-Business § All aspects of IT are more externally visible § Serve as mediator among various functions – Disintermediation – Reintermediation – Hypermediation – Infomediation

Disintermediation § § § Eliminates the middleman Electronic stock trading Forces focus on service differentiation

Reintermediation § Use of Internet to reassemble buyers and sellers in new ways § Allows negotiation of prices, warranties, quality, shipping § Example includes merging of banking, insurance, and other financial services

Hypermediation § Interactions found via Internet transactions § Complete, seamless, invisible supply chain to customers § Leverages external partners

Infomediation § Allows technology users to manage large amounts of information § Search engines and portals provide for narrowing searches § Data mining technology is critical § IT helps business sift through information for insight and clarity

Change Agent § Dynamic Stability – IT supports business in dynamic changes with no change to business processes § Can enable/inhibit incremental and radical changes § Innovation may depend on IT

Enabler of Globalization § Expands business presence beyond borders § IT maintenance of Infrastructure and Technologies

IT/Business Gap § IT/Business alignment critical § Alignment – Application of IT in an appropriate and timely manner, in harmony with business goals, strategies, and needs § Enabler § Inhibitor

CSC Survey Top Rankings § Information Systems alignment with Corporate Goals ranked 1 st or 2 nd 9 of 11 years! § Organizing & utilizing data § Connecting to customers, suppliers, and/or partners electronically § Optimizing organizational effectiveness

IT vs. Other Functions § § § Encompasses entire enterprise Affects all business functions Extends beyond business boundaries Affects every level of management Impact affects entire value chain, including suppliers and customers § Creates synergy between departments

Porter’s Generic Value Chain

Value of IT § IT usage has increased three-fold since 1978 § Substantial capital expenditures § Cost of doing business § Productivity measurement § Alignment with strategic business goals

Luftman’s 6 Components § Communications Maturity § Competency/ Value Measurement Maturity § Governance Maturity § Partnership Maturity § Scope and Architecture Maturity § Skills Maturity