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The Top IS Job
Simon Fraser UniversityCMPT 301, Week 2, Fall 2007Wang, Can; Email: cwa50@sfu.cahttp://www.cs.sfu.ca/CC/301/cwa50/
Outline
1111
2222 The CIO's Responsibilities
The Evolution of IS Organization
The Management of IT Organization Early days: manage the technology Then: manage the information resources Now: IT is pervasive and is a mandatory link
between enterprises Affecting every aspect of organizational
performance Leading to the formation of "business ecosystem“ IT and IS
Waves of Innovation (1)
Source: Kenneth Primozic, Edward Primozic, and Joe Leben, Strategic Choices: supremacy, Survival, or Sayonara (New York: McGraw-Hill, 1991)
Wave 1: Reducing costsBegan in the ’60sFocused on increasing the productivity of individuals and business areas by e.g. automating manual processes
Wave 2: Leveraging InvestmentsBegan in the ’70sConcentrated on more effective use of corporate assetsSystems justified on ROI, cash flow etc.
Wave 3: Enhancing Products & ServicesBegan in the '80sAttention shifted to using IT to produce revenue by gaining strategic advantage or creating entirely new businesses
Wave 4: Enhancing Executive Decision MakingBegan in the late '80sChanged fundamental structure of organizationsCreated real-time business management systems
Wave 3 & 4 must be implemented once an industry leader has set a precedent
Wave 5: Reaching the ConsumerBegan in the '90sUses IT to communicate directly with consumers New marketing, distribution and service strategiesChanges the rules of competition
Management must be involved in guiding IT use once you "cross the line"
Case Example: The SABRE System (1) Waves 1 and 2
SABRE built to reduce costs of making airline seat reservations
Wave 3 System expanded so it could be used directly by
travel agents Wave 4
System expanded to include hotels and rental cars through alliances with these suppliers
The SABRE System (2)
Wave 5 Reaching the consumer: EAASY SABRE enabled direct consumer access
from their PCs AAdvantage – frequent flyer program
Most profitable customers Web sites
A Sixth Wave?
The Waves of Innovation was postulated in 1991. What’s next?
Traditional Functions Are Being Nibbled Away (1) The traditional set of responsibilities for IS :
Managing operations of data centers, remote systems, and networks
Managing corporate data Performing systems analysis and design, and
constructing new systems Systems planning Identifying opportunities for new systems
Traditional Functions Are Being Nibbled Away (2)
Distributed systemsEver more knowledgeable usersBetter application packagesOutsourcing
Will IS Organization Be Driven into Oblivion?
?
New Roles Are Emerging (1)
IS is not a single monolithic organization, but rather a cluster of four functions Run operations Develop systems Develop architecture
Setting a strategy and maintaining an architecture for both IT and information, providing a framework or standard for system operations
Identify business requirements
Each of these functions require a different set of skills and a different management strategy
The business-oriented activities are more important to the enterprise
George Cox
New Roles Are Emerging (2)
Source: George Cox, Time to Reshape the IS Department? (Wentworth Research Program, 1991)
New Roles Are Emerging (3)---The Squeeze on Traditional IS
Activities
New Roles Are Emerging (4)---Will the IS Organization Be Squeezed into
Oblivion? The answer is negative, two roles will emerge
as dominant for IS function Outsourcers have not sufficient management
involvement to understand and satisfy all organization needs IS becomes the broker between technical service
providers and business units Enterprise IT Architecture (highly challenging,
must follow tightly business trends to stay competitive)
New Roles Are Emerging (5)---Roles for IS
Toward IS Lite (1)
IS started "centralized" and evolved into a "federal model" Some activities are handled centrally (standards,
operations etc.) Others are dispersed to business units to meet
local needs (e.g. application development)
Roger Woolfe
Toward IS Lite (2)
IT activities take place in three IT macro-processes: Driving innovation
Strategic planning, architecture design and business requirements definition
Delivering change System development and support of user changes
Supporting infrastructure Desktop support, data center and network operations
DrivingInnovation
DeliveringChange
SupportingInfrastructure
ExternalService
Providers
BusinessUnits
Toward IS Lite (3)
Four major structural trends for IS Lite Process-based working Outsourcing Specialist centers of excellence Increasing IT activity embedded in business units.
Toward IS Lite (4)
After IS Lite Driving innovation would be retained internally and mostly
centralized for coherence and exploitation across the enterprise.
Delivering change would be mostly moved out to the business units to get the benefits of being close to customers.
Supporting infrastructure would be selectively outsourced under central control for cost and efficiency
Case Example: LifeScan
Johnson and Johnson subsidiary New CIO = agenda to align the department
with the business Stage 1: IM organizations' purpose is to keep the
business running Stage 2: IM organizations work closely with
business units Stage 3: IM organizations partner with business
units and have direct influence on business strategy
Outline
1111
2222 The CIO's Responsibilities
The Evolution of IS Organization
The CIO’s Responsibilities (1)
The emphasis of the top IS job has changed Before mid 1980s: IT infrastructure Late 1980s: addressing business issues, helping
formulate corporate policy by creating a vision of IT
Early 1990s: IT as a catalyst for revamping the way enterprises worked (CIO appeared)
Late 1990s: Revamping business operations using IT continued with the Internet
The CIO’s Responsibilities (2)
Beginning of 2000s: The "technical member" of top management, ensuring e-business
2004: Emphasis on justifying IT investments, IT portfolio management
Today: the cost emphasis remains, outsourcing continues to grow, CIOs are expected to do much more with not much more money
Major IT Eras
CIO Roles in Three Eras (1)
The Mainframe Era Predominated 1960s – early ’80s Supporting role: DP, IS Manager, application delivery
Distributed Era From the end of ’70s (PC, LANS and WANS) Took on 4 more roles:
Organizational designer Technology advisor Technology architect Informed buyer
CIO Roles in Three Eras (2)
The Web Era Arose from the emergence of the Internet, and
esp. the Web as a business tool This era is still in its ‘infancy’ but add to the CIO’s
‘job’ the role of business visionary The Internet is about fundamental business change, not
technology New business models
Relationship between CEO and CIO vary along a wide spectrum
Four Aspects of the CIO Role
Leading Creating a vision by understanding the business
Governing Establishing an IS Governance structure
Investing Shaping the IT portfolio
Managing Establishing credibility and fostering change
Leading: Creating a Vision by Understanding the Business Seven approaches to understanding the
business and its environment: Encourage 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 a line executive
Concentrate on Lines of Business IT needs to server individual lines of business rather
than the entire company Supporting current operations (alignment) Using systems to influence future ways of working (impact)
Creating a Vision of the Future and Selling It Technology now has more influence in business.
CIOs need to create a vision of the enterprise's future and its use of IT and sell those ideas to others
In today's volatile environment, direction setting and short-term exploration are more appropriate than multiyear plans. Most corporate vision today has an IT underpinning
IT Governance
IT Governance The assignment of decision rights and the
accountability framework to encourage desirable behavior in the use of IT Governance is about deciding who makes decisions whereas
management is about making decisions once decision rights have been assigned
Driving force for a better IS governance structure Financial scandals Large and diverse IT expenditure
Centralizing all IT decisions is not a solution
Six Governance Styles
A business monarchy is where C-level executives (CEO, CIO..) hold the right to make decisions
IT monarchy: IT executives hold the right to make decisions
Feudal is where business unit leaders (or delegates) have decision or input rights
Federal means that the rights are shared by C-level executives and one other tier of the business hierarchy
A duopoly is where one IT group and one business group share a right
Anarchy is where individual process owners or end users hold a right
Five Decision Areas
IT principles are high-level statements about how IT will be used to create business value
IT infrastructure strategies state the approach for building shared and standard IT services across the enterprise
IT architecture states the technical choices that will meet business needs
Business application needs is where the business defines its application needs
IT investment and prioritization defines the process for moving IT-based investments through justification, approval and accountability
IT Governance Arrangements Matrix
Investing: Shaping the IT Portfolio IT investments has gained increased attention
CIOs were usually falsely blamed for making poor IT investment
Two key IT investment topics What to invest in (strategic) How to make investment decision (tactical)
IT portfolio management Systematic management of large classes of planned
IT initiatives, projects, and ongoing IT services etc.
A Strategic View of Making IT Investments (1) Intense competition in "non-regulated" industries
forced executives to innovate by investing in IT, improving their business processes and offering new products and services These innovations, in turn, increased productivity, thus
forming a virtuous circle
Innovation in IT,Products, and
Management Practices
Increased Industry
Productivity
Fierce IndustryCompetition
A Strategic View of Making IT Investments (2)
IT investments best contribute to productivity increase if Investing in main levers of productivity Getting the investment sequence and timing right Pairing new systems with new processes and
work practices that take advantage of the new IT capabilities
Targeting IT Investments
Concentrate IT spending on "levers that matter" Either increase output or decrease input "Levers that matter" differ among industry
E.g. Data warehouse for Wal-Mart
Sequencing and Timing IT Investments
---Case Examples: Wal-Mart Vs. Kmart Wal-Mart
(1) Automating the flow of products in its internal supply chain (2) Turning outward to suppliers coordinating its own operations with theirs (3) Turning to customers to better plan its merchandising mix and replenishment (4) Data warehouse
Kmart Used IT to target its marketing promotions
Result: increase in demand from successful promotions could not be met due to problems getting products into stores
Complementing IT Investments Accompanying management practices must
also be changed to unlock the potential of IT investments
A Tactical View of Making IT Investments Most companies have far more opportunities
than they can fund Must find a way to prioritize the possibilities
to best support their business' strategic objectives Prioritization Maximize the business value of their IT
investments
Establishing Credibility and Fostering Change
CIOs are in the change business But before a CIO and the IS organization will
be heard as a voice for change, the must be viewed as being successful and reliable
To foster change, a CIO must establish and then maintain the credibility of the IS organization
Establishing Credibility
The key to credibility is to manage "today" operation well Computer operations Technical support (including networks) The help desk Maintenance and enhancement of existing
systems Delivery oriented with a high level of service
Outsourcing IT support functions
Working across Organizational Lines CIOs now find that systems they implement
affect people outside their firm Supply side: fewer suppliers but deeper
relationships Customer side: need to get credibility from
customer executives to build and use inter-business systems
The Office of the CIO
The work of the CIO has become so broad and complex that it should be handled by a team Chief Information Officer (CIO)
Heads IS and works with top management, customers and suppliers
Chief Technology Officer (CTO) Heads IT planning, which involves architecture and
exploration of new technologies Chief Operations Officer (COO)
Heads day-to-day IS operations Chief Project Officer (CPO)
Oversees all projects and project managers
Whither CIOs?
Different periods of recent history have seen executives with different backgrounds “running the show” Manufacturing = in the early 1900s Sales and Marketing – 30s to 50s Finance – 70s to 90s
Problems and scandals Future – perhaps now CIOs have the most
appropriate backgrounds to run companies
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