Ibe 250 IT Strategy n n n Strategy

Ibe 250 IT Strategy n n n Strategy work – macro perspective System specification – micro perspective Strategy: n n What kind of problems do we have? How IT can solve these problems? Realistic plan for IT IT to support the organization 9/25/2020 MS Ch. 1 1

Strategic IT-management Goal: n n n Employ IT to improve the competitiveness of the company Computer equipment (PC, servers. . . ) is not enough! Neither is software (Office, accounting…) These are only tools that we can use to get where we want to be The major questions are therefore: n n Where are we going? How can IT support us in getting there? 9/25/2020 MS Ch. 1 2

Central themes n n Globalization E-enablement Knowledge sharing and Knowledge Management Automate (not in textbook) 9/25/2020 MS Ch. 1 3

Globalization n Through IT, enterprises can work efficiently, over boundaries In this respect, IT supports globalization With IT one central office can support an unlimited number of branches (Rema, ARK, Mc. Donald, Avis, SAS…) 9/25/2020 MS Ch. 1 4

E-enablement n The Internet provides the infrastructure for doing e-business: n n n Network Software Standards 9/25/2020 MS Ch. 1 5

Knowledge Sharing & Mangement n n Between people (sharing) From people to systems: n n Processes Software Databases The organizations knowledge must be maintained 9/25/2020 MS Ch. 1 6

Automate functions n n Reduce expensive manual work Improve efficiency Perform tasks that cannot be performed manually Reduce lead times 9/25/2020 MS Ch. 1 7

Atoms to bits Percent employed 9/25/2020 MS Ch. 1 8

Employment in the future n Safe: n n Health care Education Service Not so safe: n n Industrial jobs Service functions that can be automated (bank, travel agency, toll both collectors…) 9/25/2020 MS Ch. 1 9

Interesting question n n Until now technology have resulted in layoffs in one sector while creating new jobs in others Is this the case today, or are we looking at permanent unemployment?

Remove (some) intermediates n Case: Working a cash register in a grocery n n Require: n n n Can be automated But require a higher level of formalization Need experienced customers (and honest) Either prepackaging of everything, or letting the customer identify items not packaged (e. g. , fruit) Can be effective for large supermarkets Difficult to remove all persons 9/25/2020 MS Ch. 1 11

OECD (some years ago) n n OECD: Norway will get a lower development rate than other countries OECD: Because we are not good enough to employ IT But, we have PC’s everywhere, some of the best telecom systems in the world… Or…. 9/25/2020 MS Ch. 1 12

Our experience n n n n Many companies do not have a clear idea of where they are They have no clear idea of where they are going They use IT for simple functions Only off-the-shelf products Use IT to make their business more effective, but uses a lot of money on IT Complex processes are often manual – with little or no IT support Do not have the knowledge of how they can use IT strategically 9/25/2020 MS Ch. 1 13

Course contents Management n Organizations n Social relationships n Business ideas n Information Technology n 9/25/2020 MS Ch. 1 14

IT center n The change in tasks for the IT center be used to illustrate the development of IT over the last 50 years 9/25/2020 MS Ch. 1 15

The development of the IT center n Phases (hardware): n n n Centralized: Operating a mainframe Then decentralized: Mini computers, private networks, equipment in the user environments The users get their own computer - PC development. More and more happens locally Connection: client-server, local area networks (LAN), and then the Internet More automation, more centralization…? 9/25/2020 MS Ch. 1 16

Cloud computing n n n Organizations may put the IT center in the cloud Buying computer resources from others Inexpensive, resources when needed Needs “terminals” and network Risks: confidentiality, what if the cloud center terminates Regulations: Privacy, tax authorities and others may demand to know where data is stored

Software n Phases: n n n n All software from mainframe manufacturer (operating system, file system, development systems, applications). Proprietary development. Software from many vendors. Proprietary development still important, but more systems available in the market. Decentralization. Abundance of ”Off-the-shelf” products (Office package o. l. ). Parameterization of large systems (SAP, Baan). Less proprietary development. Software architecture. Centralization. Software in the cloud Is proprietary development passé? 9/25/2020 MS Ch. 1 18

The organization’s external environment n n n Quality, from the removal of exceptions to custom orientation The customer gets IT Deregulation Crossing of industrial barriers Globalization Shorter development and life expectancy for products 9/25/2020 MS Ch. 1 19

The organization’s internal environment n n n Team Work everywhere, at any time Outsourcing, strategic alliances Flatter organizations, reduced hierarchy People as a resource, learning, building competence, focus on knowledge This is theory, practice may be different! 9/25/2020 MS Ch. 1 20

”Mission” for Information systems n n From: automating stand-alone functions (accounting, stock keeping, salary, invoice handling…) Through: Correct information at the correct time To: Use IT to improve the competitiveness of the organization Textbook definition: n ”To improve the performance of people in organizations through the use of information technology” 9/25/2020 MS Ch. 1 21

Different models of Technology use 9/25/2020 MS Ch. 1 22

Model for IS (Inf. Systems): n n Technologies Users A model for delivery (for development, delivery and installation of IS) Management of IS/IT 9/25/2020 MS Ch. 1 23

Technologies n n n n Powerful PCs Cheap memory components and processors Powerful server Internet Physical networks (fiber, wireless) Multimedia Integration (electrical products, IT) Cloud computing 9/25/2020 MS Ch. 1 24

Users n n More experienced Interactive systems, ”empowerment of users” Procedure oriented tasks Goal based tasks 9/25/2020 MS Ch. 1 25

System development and delivery n n Hardware at the bottom level On the top, the goal of the organization and user requirements The task of the software is to map from the one to the other We shall distinguish between systems for procedure oriented activities and systems for goal based information work. 9/25/2020 MS Ch. 1 26

Automation vs. support functions 9/25/2020 MS Ch. 1 27

Framework for IS management (and for the textbook) 9/25/2020 MS Ch. 1 28

Case: Mead. Westvaco Corporation n n Produces paper (as Norske Skog), chemicals, consumer and office products in United States and Canada 1960: Centralized IT function 1967: Decentralization of IT (the divisions established their own IT centers) Centralized organization in six groups. 9/25/2020 MS Ch. 1 29

Mead: Pre 1980 organization 9/25/2020 MS Ch. 1 30

Mead: Focus on end users (1980) n n n Decision Support Applications (DSA) organized user support for the whole organization (choice of system, installation, user support) Information Services had the responsibility for traditional IT functions (network, database, development of a company wide system, etc. ) Information Resources Planning and Control had responsibility for planning future systems, the next technology, etc. 9/25/2020 MS Ch. 1 31

Mead: Organization (1980) 9/25/2020 MS Ch. 1 32

Mead: Leverage the IT infrastructure (1990) n n Decentralization: Local experts Application system consultants: To control the development of end user systems All user support in one group A network team (which also had as its task to look at network connections to suppliers and customers) 9/25/2020 MS Ch. 1 33

Mead: Corporate Information Resource Group (1990) 9/25/2020 MS Ch. 1 34

Mead: Hindsight (1990) n n Focus on technology Focus on internal systems Focus on traditional products and processes i. e. , this had been a technology plan 9/25/2020 MS Ch. 1 35

Mead: Strategic Opportunities Framework External markets 9/25/2020 MS Ch. 1 Internal operations 36

Mead: Business process reengineering n n n Demand significant changes We will not find these in internal functions only Business processes are important Think ahead Gave results at Mead (but not in all companies) 9/25/2020 MS Ch. 1 37

Customer orientation n n Terminals at the customers already from 1980 EDI (Electronic Data Interchange) Now over the Internet e. Business, motto: ”it is easy to do business with us” 9/25/2020 MS Ch. 1 38

Mead: Strategy ahead n n n New organizational structure Include customers and suppliers Support reengineering Internet as an important element in the implementation of new strategies Web simplifies, link to Web instead of inserting and maintaining data in own databases 9/25/2020 MS Ch. 1 39

Mead: Vision 9/25/2020 MS Ch. 1 40

Mead: ERP (Enterprise Resource Planning) system n n n n SAP Considered several times, but was not found to be appropriate for the forest industry The divisions wanted SAP One system for the whole company Implementation from 1999, division by division Controlled by management, consultants from the outside (IBM) Learnt from others Lotus Notes in addition (just as STATOIL until now) 9/25/2020 MS Ch. 1 41

Mead: SAP n n n Very big and complex Must follow framework and rules within SAP Defines roles (tasks), workflow between roles Divisions looses freedom and flexibility, larger updates must now be synchronized with the whole company Replaces proprietary systems 9/25/2020 MS Ch. 1 42

Mead: e. Commerce n n Largest effect internally The Intranet defines how Mead conducts its business processes n Web interface in existing systems n B 2 B - ”old wine in new bottles” n n Full B 2 B cannot be realized before the customers are ready, i. e. , before they rebuild their systems IT is a strategic tool 9/25/2020 MS Ch. 1 43

Mead – New structure 9/25/2020 MS Ch. 1 44

Mead. Westvaco – today n n n IT is 3% of their budget (0. 75% in the 1970 s) Important that IT support business ideas 4 main areas for IT investments: n n n Infrastructure Standard applications Business applications Experimental systems Goes with SAP 9/25/2020 MS Ch. 1 45

Norwegian SMB companies n n All use off-the-shelf products The question is, what to do with the functions that cannot be handled by these. Different approaches are in use: n n Manual handling with support from user-defined systems in products as Excel Develop and use proprietary systems The answer is often dependent of the type of company: n n Standard Niche 9/25/2020 MS Ch. 1 46

A “standard” company n Similar to many other businesses, e. g. : n n n n Grocer Plumber Power company The competitiveness of the company is often based on its location Can use software developed for this type of business Advantage: Development costs are shared by many This is not static, new functions may be needed 9/25/2020 MS Ch. 1 47

An example n n n A grocer performs a fairly standard job He can use the software provided by the chain (cash register, accounting, etc. ) Similar to the software used by other chains However, “out-of-date” products is a huge cost. Can this be handled better than today? This may be something that the chain may address, but is clearly outside the scope of the grocer 9/25/2020 MS Ch. 1 48

Niche company n n Its competitiveness is based on its idiosyncrasy, there are few competitors The company tries to be best within its niche With standard software it will, at the best, just be as good as the others, i. e. , IT is not a competitive factor With proprietary software it has the possibility to be better than its competitors, i. e. , IT as a competitive factor 9/25/2020 MS Ch. 1 49

Standard and niche n n There may be companies that perform a fairly standard job, but may have some niche functions Example: Høgskolen i Molde n n n Use standard systems for accounting, student administration, course handling Similar to many other institutions But could develop their own system for making prognosis, for seeing into the future 9/25/2020 MS Ch. 1 50

Proprietary development n n n Necessary in the seventies and eighties Considered too expensive and time consuming in the nineties (due to many project that were not kept within budget and time limits, or were not finished at all) Still a possibility today, especially for SMEs. 9/25/2020 MS Ch. 1 51

Small and medium sized enterprises n can reduce development costs by: n n Using application tools (such as MS Access) Employ the Office package to its limits (e. g. , link between applications) Important: IT-development must be an integrated part of BPR (Business Process Reengineering) Then proprietary development is a possibility 9/25/2020 MS Ch. 1 52