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An update of my presentation on IT Strategy Challenges. This is the deck I will use at a Boston University Executive Program on October 19, 2009.
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Winning with Information Technology in the Network Era
Professor N. Venkat VenkatramanDavid J. McGrath Jr. Professor of Management
October 19, 2009
Discussion Overview
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IT is everywhere
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And could influence even more in the future….
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And change the geography of work
(c) Venkatraman, 2009
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Live
Work
Play
Learn
Connect
Innovate
Consume
Transact
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Why am I so bullish on IT?
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Take the three I.T. ‘laws’ together..
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The Scope of IT extends beyond processes
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A working framework to understand the scope of IT
TechnologyDomain
BusinessDomain
ProcessProduct Service
Moore’sLaw
Metcalfe’sLaw
BandwidthLaw
Discussion Overview
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Focus of IT Strategy
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Accelerated Pace of Innovation
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Sketching out the possibilities…
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Business Implications:Auto Sector as a Case in Point
IT Strategy in the Auto Sector
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Product Process Services
Bandwidth Law
Metcalfe’s Law
Moore’s Law Traditional business process focus in the auto sector
Automobile– “computers on wheels”
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“Cost of electronicsin cars” (~20--50%)
Automobile– “computers on wheels”
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Lines of Software Code
‘Black Box’
OnStar’s impact is broader than the core service domain
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Ford (and Microsoft): Sync
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Business transformation underway…
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Source: GM
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Management ideas for network era
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20th Century 21st Century
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Computer industry [circa 1980]
Source: Bill Gates TestimonySource: Bill Gates Testimony
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Computer industry [circa 2002]
Source: Bill Gates Testimony
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We can apply the same logic in many sectors…..
Discussion Overview
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Value from IT Resources
Leadership Responsibility
StrategicFocus
Innovation
Implementation
Business IT/IS
CostCente
r
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Cost Center
Focus Best in Class global IT infrastructure
Business Case Lowest delivered cost benchmarked against external referent; activities not directly connected to business strategy; but necessary to run the business
Organization Separate and distinct from business operations; much like a utility
Sourcing Best in class global sourcing partners and vendors
Performance Indicators Cost indices
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Value from IT Resources
Leadership Responsibility
StrategicFocus
Innovation
Implementation
Business IT/IS
CostCente
r
ProfitCente
r
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Profit Center
Focus Supporting current business operations
Business Case Contributions to customer value creation and delivery; achieving current profitability levels by supporting all aspects of the enterprise operations
Organization Embedded (and partnering) with business operations
Sourcing Selective use of best in class global sourcing partners and vendors
Performance Indicators Contributions to performance indices
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Value from IT Resources
Leadership Responsibility
StrategicFocus
Innovation
Implementation
Business IT/IS
CostCente
r
ProfitCente
r
Growth
Center
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Growth CenterFocus Shaping future growth trajectories through new business
model innovationsBusiness Case Exploring different avenues for growth; examining the
transformational changes required to rebuild the business models
Organization Embedded (and partnering) with business operations;Shared business-IT responsibility for business model transformation
Sourcing Selective use of innovation networks
Performance Indicators Contributions to growth and transformation indices
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Value from IT Resources
Leadership Responsibility
StrategicFocus
Innovation
Implementation
Business IT/IS
CostCente
r
ProfitCente
r
Growth
Center
Investment
Center
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Investment Center
Focus Influence future growth trajectories through selective experimentation
Business Case Allowing for experimentation of how IT could create and shape new business models
Organization Decoupled from current operations to give a sense of separate identity for pursuing new trajectories
Sourcing Selective use of innovation networks and partners
Performance Indicators Indices on exploring initiatives that shape business models
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Managing their relative emphasis;and dynamic shifts
Leadership Responsibility
StrategicFocus
Innovation
Implementation
Business IT/IS
CostCente
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ProfitCente
r
Growth
Center
Investment
Center
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There are significant gaps in reality..
IT Capital for Innovation
IT Capital for Implementation
Today Desired
1
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There are significant gaps in reality..
IT competence for Innovation
IT competence for Implementation
Today Desired
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There are significant gaps in reality..
IT Sourcing for Innovation
IT Sourcing for Implementation
Today Desired
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There are significant gaps in reality..
IT Performance for Innovation
IT Performance for Implementation
Today Desired
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There are significant gaps in reality..
IT Mandate for Innovation
IT Mandate for Implementation
Today Desired
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Discussion Overview
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Leadership challenges
• We say innovation… but we manage for implementation
• We say future… but we manage for today (and yesterday)
• We say business value.. But we get bogged down with IT costs
• We say shared business-IT responsibility but we blame IT for the problems
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Winning with IT
Value creation for today & tomorrow
No business innovations without IT
“You”
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So….in conclusion
• IT’s impact beyond traditional process domain• We are in the early stages of transformation with IT• Business models built on and with IT functionality• Business organizations architected with IT• Continuous balancing of innovation and
implementation• More diffused but coordinated responsibility for IT
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Winning with IT:Can you make it happen?
Thanks very much….
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