File: CIPS99.PPT 1

Yogi Schulz

I. T. Value

CIPS Informatics ‘99Presenter: Yogi Schulz

InformationTechnologymust deliver Value!

“HOW WILL I EVER ADD

VALUE TO THE BUSINESS

WITH I. T.?”

File: CIPS99.PPT 2

Yogi Schulz

I. T. Value

PresentationOutline

Is I. T. delivering value?

Characteristics of systems

Achieving I. T. value

Managing systems for value

CEO - CIO relationship

Conclusions

Recommendations

OperationsPlanning

Partnership

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Yogi Schulz

I. T. Value

Dilbert ExplainsBusiness Value

D960913

THE COMPANY ANNOUNCEDTHAT WE WILL “ABANDONOUR STRATEGY OFEFFICIENTLYPRODUCING VALUABLEPRODUCTS . . .”

Is I. T. Delivering Value?

No connectionbetween I. T. investments and business results

Organizations are unhappy with I. S. department performance

Strategic uses of I. T. are irrelevant to my industry

I. T. investmentsare a good thing

Organizations believeI. S. department is making an important contribution

Strategic uses of I. T. provide competitive

advantage

No way Definitely

Value is difficult to measure

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I. T. Value

Consequences ofI. T. Value Ambiguity

When we can’t articulate the value, we tend to focus on the cost

To many executives, the cost of I. T. appears:– substantial; even excessive– never-ending– not well managed

Creates I. T. direction toward:– under-investment– down-sizing– outsourcing

Value managementcan lead to a

superior outcome

VeritasGold

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I. T. Value

Characteristics ofToday’s Systems

Complex business processes/calculations

Complex data/data types

Large/valuable data volumes

Distributed access

Security requirements

Value is challenging to achieve

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I. T. Value

Most industriescan’t execute without I. T.

Could our researchers have evaluated as many alternatives without I. T?

Could our product developers have created new products as quickly without I. T?

Could our production department have produced as many units without I. T?

Could our marketers have achieved as much margin or volume without I. T?

Could our top management have evaluated a potential acquisition without I. T?

Valueis

imperative

Valueis

imperative

MerakPetroDesk

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Yogi Schulz

I. T. Value

Assessing I. T. Value

Approach

Focus

Measurement

Problems

Advantages

Aspects TraditionalView

Cost/benefit

EfficiencyDoing Things

Right

Easy to Selland Accept

MissedOpportunities

ValueView

Business Strategyincludes Cost

EffectivenessDoing the

Right Things

CreativeThinking

OrganizationalResistance

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I. T. Value

Steps ToAchieving I. T. Value - 1

What are you trying to achieve?– Identify the business objectives– Define supporting business strategies

What are your competitors/peers doing?– Assess competitor actions– Check direction/thinking of other industries

Why are the business objectives important to you?– Articulate the business value to be gained

How will you know you are successful?– Identify business end outcomes– Identify what business indicators will be measured

Align I. T.with the

Business

Align I. T.with the

Business

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I. T. Value

I. T. value is achievable

Steps ToAchieving I. T. Value - 2

Identify required business process changes

Determine I. T. support for business:– I. T. organization style– staff competencies– application portfolio– I. T. infrastructure

Define I. T. strategy that supports business

Make I. T. investments to support business success

Facet GIS

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I. T. Value

Manual Support

Tool

Value vs. System Capability

Improving System Capability

Increasing

SinglePoint

Solution

Multi-Point

Solution

InterfacedSolution

LooselyIntegratedSolution

TightlyIntegratedSolutionV

alue

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Yogi Schulz

I. T. Value

Value vs.Integration Cost

Increasing Costs

OptimumData Integration

Range Complexity Drivers:

number of interfaces

number of users/departments

number of locations

amount of business change

sophistication of end-users

Increasing

Value

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I. T. Value

Improving Application Management

InstallSoftware

Plan & Manage Operation

Establish DataCustodianship

Enhance forIntegration

Align IT Strategywith Business

Value vs.Application Management

Increasing

Value

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Yogi Schulz

I. T. Value

Business/I. T.Partnership Results

I. T. Leadership

Bus

ines

s L

e ade

r shi

p

Needs well addressedSystem doesn’t workDevelopment ongoing

Meets important needsSystem works wellDevelopment completed

Meets few needsSystem really worksDevelopment quick

Meets no needsSystem doesn’t workDevelopment nevercompleted

Compromise

Chevron U. S. A.Downstream Marketing

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I. T. Value

CEO - CIO Relationship

Working poorly– CIO fired– most/all of IT outsourced– business objectives under-achieved; IT value missed

Working well– CIO well-regarded member of top management team– valuable parts of IT managed internally– business objectives achieved with IT value

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I. T. Value

How CIOs Self Destruct

Believe that I. T. budget is beyond challenge

Insist that business must trust superior, specialist knowledge

Focus on I. T.:– performance measures– administrative tasks

Achieve no conspicuous I. T. successes

Believe in I. T. strategies

Allow a large number of active development projects

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Yogi Schulz

I. T. Value

How CIOs Add Value

Focus obsessively on business imperatives

Interpret external I. T. success stories

Establish and maintain executive relationships

Communicate the I. T. performance record

Work to achieve a shared vision for the business

Enable business transformation

Insist on a small number of active development projects

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I. T. Value

How CEOs Fail the CIO

View IT as a support function

Focus on IT cost minimization

Believe that IT doesn’t apply to his industry

Manage IT as an adjunct to the business

Position the CIO as specialist functional manager

See the CIO as a high-paid technologist

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Yogi Schulz

I. T. Value

How CEOs Support the CIO

Position the CIO as agent for change

Focus on IT effectiveness within business initiatives

Institutionalize business values for I. T.

Include the CIO on the top management team

Manage I. T. as integral to the business

DyadArgus Query

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I. T. Value

Conclusions

I. T. investments must deliver value to:– meet competitive threats– capture business opportunities

Business strategy can be successful if it incorporates I. T. strategy

All is for naught in climate of poor relationships

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Yogi Schulz

I. T. ValueRecommendations

Allow no I. T. initiatives; only business initiatives with I. T. partnership

Build an I. T. strategy aligned with business strategy

Strengthen the CEO - CIO relationship

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Yogi Schulz

I. T. Value

700, 400 - 5th Ave. S.W.Calgary, Alberta Canada T2P 0L6

Phone/Fax: (403) 249-5255E-mail: YogiSchulz@corvelle.com

Web: www.corvelle.com

President of Corvelle Management Consultants

Information technology management consulting

Project management and systems development

Computing Canada columnist

PPDM Association Board of Directors

I. T. must deliver Value!

Yogi Schulz

Management Consultants

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Yogi Schulz

I. T. Value

Bibliography - 1

Center for Research on Information Technology and Organizations (CRITO) – http://www.crito.uci.edu/

A Decision Style Approach for Creating Customer Value through Business Information Systems – http://www.enersearch.se/research/ISES/ises4/mi/market.html

An Empirical Analysis of the Determinants of Information Systems Productivity and the Role of Outsourcing Policy– Yogesh Malhotra, 1995– http://www.brint.com/papers/outsourc/intro.htm

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I. T. Value

Bibliography - 2

Becoming the New Technology Executive– CIO Canada, June 1996, p. 39

DMR Group - Driving Up Investment Success Rates– http://www.dmr.ca/corporatif/en/services_and_solutions/benefits.htm

Glomark’s Economic Value Creation Methodology– http://www.glomark.com/maine.htm

The Information Paradox– John Thorpe & DMR Consulting Group staff, 1998

Information Technology and Tomorrow’s Manager– Linda M. Applegate, James I. Cash Jr., D. Quinn Mills– Harvard Business Review, Nov. - Dec. 1988, p. 128

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I. T. Value

Bibliography - 3

Information Technology for the 21st Century– http://www.inpo.navy.mil/it-21/outsrc.html

International IT Strategy Census 1999– COMPASS Analysis

IS & IT Management: Delivering Value With Information Technology – http://www.info-edge.com/5406toc.htm

Is Your CIO Adding Value?– Michael Earl & David Feeny– Sloan Management Review, Spring 1994, p. 11

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I. T. Value

Bibliography - 4

IT Outsourcing - Operational Improvement or Strategic Imperative?– C. Lawrence Meador, MIS Quarterly– http://www.mstnet.com/mstnet/articles/wp_outsrc/wp_outsrc.html

IT/Strategy Alignment - Identifying the Role of Information Technology in Competitive Strategy– C. Lawrence Meador, MIS Quarterly– http://www.mstnet.com/mstnet/articles/wp_it/wp_it.html

A Lean, Mean IT Machine – Lynda Radosevich, Infoworld, 26 July 1999– http://www.infoworld.com/cgi-bin/display/Archive.pl?/99/30/z01-

30.64.htm

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I. T. Value

Bibliography - 5

Measuring Information Technology Investment Payoff: Contemporary Approaches– Mo Adam Mahmood and Edward Szewczak, 1999– http://www.idea-group.com/investment.htm

Measuring the Strategic Value of Information Technology Investments– Kurt Conrad, The Sagebrush Group – http://www.sagebrushgroup.com/value.htm

Positive Support Review Inc.– http://www.psrinc.com/slides/sld001.htm

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I. T. Value

Bibliography - 6

The Role of IT in Business Process Reengineering– http://www.mentorgrp.com/pubs/mrrison.htm

S. C. Johnson, A portfolio-value approach– http://www2.computerworld.com/home/print9497.nsf/All/S

L0815jwax 15 August 1994

The Value of IT in the Manufacturing Sector– A Compass Business Consulting White Paper– Tim Randall, Manufacturing Consulting Services– http://www.compass-analysis.com/

What Factors are Impacting IT’s Effectiveness?– PM Network, June 1999, p. 31

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I. T. Value

Benefits of Alternative Strategies for Achieving Value

InsourceMaintain control

Set priorities

Build unique specialized skills

Create competitive advantage

Minimize costs?

OutsourceAccess superior expertise

Minimize infrastructure investments

Avoid mistakes

Minimize schedule?

Check out the bibliographyCheck out the bibliography