The Challenges Ahead Chapter 15 Information Systems Management In Practice 7E McNurlin & Sprague PowerPoints prepared by Michael Matthew Visiting Lecturer,

The Challenges Ahead

Chapter 15

Information Systems Management In Practice 7EMcNurlin & Sprague

PowerPoints prepared by Michael MatthewVisiting Lecturer, GACC, Macquarie University – Sydney Australia

Part V: Thinking Ahead

• This part, which consists of just one chapter, is intended to stimulate thinking about the future and the roles IT could play in the future

• It begins by exploring some intriguing thoughts about potential organizing principles for an Internet-based world

• These rules of the road do not necessarily extrapolate from the rules of the physical world, so they are worth considering carefully, especially when they appear counter-intuitive

©2006 Barbara C. McNurlin. Published by Pearson Education.

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Part V: Thinking Ahead cont.

• The chapter also looks at the people issues of moving ahead– Such as people’s enthusiasm or reticence to embrace new

technologies and– How to spur non-IT executives to learn about their roles in

leading the use of IT

• In essence, this part is about leadership in the Internet-based economy– So we end this unit / book as we began it, highlighting the

leadership box in our framework


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Chapter 14• The computer’s capability to leverage people’s brain power allows

companies to not only communicate in new ways, but to compete in new ways

• It looks at the challenges facing IS organizations worldwide by assembling a collage of opinions about possible principles underlying the e-world– Acknowledging our transformation into a networked world, it describes three

viewpoints of the differences between non-networked and networked and their importance

• The lecture / chapter concludes with ways to move forward with the people who need to lead us into this new business world and the people who will be led into it

• Case examples include NYNEX, a football team, National Semiconductor,

Sun Microsystems, Cemex, Semco S.A., Capital One, MIT’s IT for the Non-IT Executive Program and SIM’s Strategic Business Leaders Program


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Today’s Lecture

• Introduction

• Organizing Principles– The Learning Organization– Processes Rather Than Functions– Communities Rather Than Groups– Virtual Rather Than Physical– Self-Organizing Rather Than Designed– Adaptable Rather Than Stable– Distributed Rather Than Centralized


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Today’s Lecture cont.

• Understanding A Networked World– The Internet Mindset– Where’s the Value in a Network?– The Rules of Networks

• Moving Forward– Understanding Users– Increasing Executives’ Understanding of IT


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Introduction• Despite all the ‘bad news’ of the dot-com crash etc.

– Enterprises around the world are quietly redefining their strategy, work environment, and skills to move into the e-world

• In this chapter we address the challenges faced by IS organizations worldwide by assembling a collage of possible principles underlying the ‘e-world’

• The computer is an amazing machine– Leverages people’s brain power, not just muscle power

• This capability is being used to process data & communicate in new ways

• This communication in turn allows companies to compete in new ways


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Organizing Principles

EXCITING TIMES!We are in a time of grand exploration – a new economy is being

born (perhaps in fits and starts)

• Equally frustrating though – is that the tenets of this evolving economy are so different that the rules are just now being formulated, reformulated and reformulated again!

• As the economy matures – some principles will prove to be true, while others will fall by the wayside

• The following opinions offer promising new thinking on organizing principles

• They point to areas enterprises need to focus on to succeed in an ‘e-economy’


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Organizing Principles The Learning Organization

Peter Senge The 5th Discipline: The art & practice of the learning organization.

• Most organizations live only 40yrs – 1/2 the life of a person, because they have ‘learning disabilities’

Organizational Learning Disabilities1. Enterprises move forward by looking backward in that they rely on

learning from experience = companies solve the same problem over & over

2. Organizations fix on events – yet the real threat comes from processes that move so slowly, no one notices them

3. Teamwork is not optimal, contrary to current belief. Team based organizations operate below the lowest IQ on the team = skilled incompetence


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Organizing Principles The Learning Organization cont.

• Organizations that can learn faster than their competitors will survive– In fact, it is the only sustainable advantage

• To become a learning organization, an enterprise must create new learning & thinking behaviors on its people


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• An organization and its people must master the following five basic learning disciplines:

1. Personal mastery: lifelong learning• People reach a special level of proficiency when they live creatively• This personal mastery forms the spiritual foundation for the learning

organization, so organizations need to foster these aspirations

2. Mental models: deeply ingrained assumptions, generalizations, and images that influence how people see the world and what actions they take• Organizations can accelerate their organizational learning by

spurring executives to surface their assumptions and test them for relevancy


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• An organization and its people must master the following five basic learning disciplines cont.:

3. Shared vision: organization’s view of its purpose, its calling• It provides the common identity by which its employees and

others view it• A shared vision is vital to a learning organization because it

provides the rudder for the learning process


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• An organization and its people must master the following five basic learning disciplines:

4. Team learning: “dialog”: where people essentially think together, occur when people explore their own and others’ ideas, in order to arrive at the best solution; “discussions”: occur when people try to convince others of their point of view

Few teams dialog; most discuss, so they do not learn.

5. Systems thinking: to understand systems, people need to understand the underlying patterns• Systems thinking is a conceptual framework for making complete patterns

clearer


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• Of these 5 disciplines – systems thinking is the cornerstone

• Until organizations look inwardly at the basic kinds of thinking and interacting they foster, they will not be able to learn faster than their competitors


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Organizing PrinciplesProcesses Rather Than Functions

Key point in the re-engineering movement wasn’t that changes needed to be dramatic – but that they needed to be made from a process centered rather than task centered view

Tasks - about individualsProcesses – about groups, we are now in a ‘group economy’• The shift to processes ramifications include:

– Need for new position, such as process owners– In one process virtually all departments are involved– One person needs to have end-to-end responsibility– Process owners provide the knowledge of the process – not just manage people

(still important!)– Sense of urgency & intensity as teams are more intense & allow less slack time


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Organizing PrinciplesProcesses Rather Than Functions cont.

Requires measuring a process:– How long it takes to complete– Accuracy rate– Cost, etc.

• Process centered structure requires:– Measures of processes which are different from measures of tasks– Measuring a process means measuring an outcome from the

customers’ point of view Process Centering:

– Turns people into professionals rather than workers• If you define a professional as someone who is responsible for achieving

results rather than performing a task• The professional is responsible to customers, solving their problems by

producing results


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NYNEXCase Example: Process centered organization (1)

• Targeted 12 major processes for redesign in a company wide business process redesign initiative– 11 used the traditional approach.– The 12th group used participative design & involved the Work Systems

Design group, along with 8 employees from across one provisioning process• This project was the only one of the 12 implemented, and = excellent results

• It followed a socio-technical approach to design a new process for handling customer orders. Rather than pass a customer among specialized groups, all the people in the process worked together, in one area, as a multifunctional team — with engineers working alongside salespeople.

• A major difficulty with an innovative new process was under-rating how difficult it would be to keep it going when it is counter cultural


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A (U.S.) FOOTBALL TEAMCase Example: Process centered organization (2)

• Has 2 processes:– Offensive– Defensive

• Process owners:– Offense co-ordinators– Defense co-ordinators

• Team has:– Position coaches– Head coach

Once on the field – the team is self-directed.

It adapts to the unfolding play


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Organizing Principles Communities Rather Than Groups

Communities – form of their own volitionGroups – formed by design, their members are

designated a priori

• Communities:– Perform the same job, or collaborate on a shared

task/product– They have complementary talents & expertise– They are held together by a common purpose & a

need to know what the others know


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Organizing Principles Communities Rather Than Groups cont.

• Most people belong to several communities of practice, and most important work in companies is done through them

• Note: not necessarily ‘defined’• Communities are the critical building blocks of a

knowledge-based document

• Three reasons:– People, not processes, do the work– Learning is about work, work is about learning, and

both are social– Organizations are webs of participation


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NATIONAL SEMICONDUCTORCase Example: Community of Practice

• Company began encouraging communities after its business model that built low margin commodity chips collapsed

• Community of practice:– Energize & mobilize the firms engineers– Shape strategy & then enact it

• A community of practice on signal processing grew slowly over 18 months & now includes engineers from numerous product lines & has been influential in strategy decisions


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NATIONAL SEMICONDUCTORCase Example: Community of Practice cont.

• National is extending communities of practice by:– Formally recognizing them– Offering funding for their projects– Handing out a toolkit to help people form their

own communities of practice


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Organizing Principles Virtual Rather Than Physical

A virtual organization doesn’t exist in one place or time – it exists whenever & wherever the

participants happen to be

• The virtual organization is a popular description of new organizational form

• Underlying principle = time & space are no longer the main organizing foundations


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SUN MICROSYSTEMSCase Example: Virtual rather than physical organization

Chief Scientist – John Gage• The network creates the company

• “Your e-mail flow determines whether you’re really part of the organization: the mailing lists you’re on say a lot about the power you have.”


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Organizing Principles Self-Organizing Rather Than Designed• Form of future organizations – chaos theory,

ecology, biology, and look at nature & how it organizes itself

• The basic tenet is that nature provides a good model for future organizations that must deal with:– Complexity– Share information & knowledge– Cope with change

The message is about being to adapt, it’s like imitating structures found in nature


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CEMEXCase Example: ‘Self organized’ organization

• Cemex (Cementos Mexicanos) delivers ready mix cement in Monterey Mexico

• Delivering mix on time difficult – traffic jams, poor road conditions, contractors not ready for their order

• Delivery rate = 35%• Deal with problem of unpredictability:

– No reservations required– Deliver faster than pizza

• Turned attention to managing information rather than assets


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CEMEXCase Example: Self designed organization cont.

• To do so:– They installed a GPS system for all the trucks & full information to

all employees– Drivers to schedule themselves in real time as calls came in,

rather than dispatchers

• Result = 98% delivery rates = delivery time 20mins, (rather than 3hrs)

= less wasted, hardened cement = 35% fewer trucks = lower fuel costs = happier customers


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Organizing Principles Self-Organizing Rather Than Designed cont.

The self-organization point-of-view•Requires taking the perspective of

“organizing-as-a-process” rather than “organization-as-an-object”

•Self-organizing systems create their own structure, patterns of behavior, and processes to accomplish their work


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SEMCO S.ACase Example: An organization with a self organizing principle

• Maverick the success story behind the worlds most unusual work place – CEO Semco Richard Semler

• Company – a Brazilian manufacturer of industrial equipment moved from 56th to 4th place in its industry by breaking all the rules to get costs down & productivity up


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SEMCO S.ACase Example: An organization with a self organizing principle cont.

Result = • Factory workers:– At times set up their own production quotas– Help redesign products– Formulate marketing plans– Choose their own bosses

• Bosses:– Set their own salaries – yet everyone knows what they

are as workers have unlimited access to Semco’s one set of books


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SEMCO S.ACase Example: An organization with a self organizing principle cont.

• The changes have been rough & not undertaken in an orderly or cohert manner

• BUT the radical changes to a far more democratic workplace allowed the company to grow 600% at the same time that the Brazilian economy was faltering

• A dramatic story & illustrative of the benefits of self-organization


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Organizing Principles Adaptable Rather Than Stable

• Speculation on future organizations– Successful organizations will be structured to naturally

support (perhaps even foster) volatility and continual surprises• Today’s organizations are structured to maintain stability;

change is minimised– Change costs a lot– Firms built for stability are not adaptable

– IT is causing the world to become more connected• Connectivity increases volatility• To keep pace companies will need to adapt more quickly• The only way to achieve adaptability = through distributed

intelligence and action– Thus organizational models will be built around networks and

will be designed to evolve©2006 Barbara C. McNurlin. Published by Pearson Education.

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CAPITAL ONE Case Example: Adaptable Rather Than Stable• Credit company that believes in “the law of large

numbers”– Conducts ‘000s of tests to read the marketplace– Strategy = dreaming up credit programs that might have value to

customers• Then = testing numerous variations of each program to see which

yield the best results• Example = discovered from its first test that “balance transfer” was a

winning offer• Strategy goes with its bottom-up culture where decisions

are made at the bottom based on the market tests– Management controls funds for rolling out new products but not

for conducting the testing• Has the lowest charge-off rate and the highest risk

adjusted margin in the industry• Grew 45% in one year!


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Organizing Principles Distributed Rather Than Centralized

• Organizations of the future could become more distributed. Two views:

1. Distributed Capitalism– Commercial purpose of organizations is changing, hence structures

will change– Managerial capitalism will not really satisfy today’s consumers due

to the huge gap between consumer desires and the good and services for sale

– Will possibly lead to federations2. Market-Based Organizations

– Cost of communications has influenced the structure of organizations• High = centralize• Reducing (like now) = more decentralized

– Organizations will structure more like democracies or markets– Job of management will move from command and control to

coordination and cultivation ©2006 Barbara C. McNurlin. Published by Pearson Education.

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Understanding A Networked World

• Our networked world has different characteristics from the non-networked world many people are used to living in


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Understanding A Networked WorldThe Internet Mindset

Just as PCs turned the mainframe data processing mindset upside down, this new world of communications, with its multi-dimensions and interactivity, wreaks havoc with businesses unless they understand and embrace the mindset of the global online world

The Internet mindset:1. Communication is personal, not mass market2. Customer contact is interactive, not broadcast3. The customer time frame is theirs, not yours4. The culture is bottom-up, not top-down


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Understanding A Networked WorldThe Internet Mindset cont.

1. Communication is personal, not mass market• Communication is ‘up close and personal’, not top-down mass

marketing• Message to traditional marketing departments = “Your ad copy is

boring”• Some corporate Web pages are stuck in the traditional

advertising model, ‘duplicating’ the ‘printed page’– THEY ARE USING THE WRONG MINDSET: MASS MARKET RATHER THAN

PERSONAL• Others get it ‘right’ and give people a way to create their ‘own’

pages e.g. My-Yahoo, My-CNN etc.


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2. Customer Contact is Interactive, Not Broadcast

• The single most important point of view to take toward the Internet is to view it as interactive, not broadcast:– Incoming, not outgoing

• In essence, the Internet is a customer’s window to companies• It is substantially different from TV because customers can

initiate communications with a firm rather than merely react to their ads

• Customer-initiated dialog supported by the Internet significantly challenges marketing departments, customer support groups and fulfillment folks


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3. The customer time frame is theirs, not yours• Customers are closer than most companies have ever

experienced• Being put on hold increasingly irks

– Today’s consumers are busy with little patience with waiting– As with TV remote controls, customers who do not get immediate

satisfaction will switch to the competition with a point and click

• Assess any proposed Internet business solution:– WILL OUR FIRM’S INTERNET STRATEGY TRULY HELP OUR

CUSTOMERS COMMUNICATE WITH US?


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4. The culture is bottom-up, not top-down • The Internet is not the expert’s world where the few impart

their knowledge to the many• The message is clear for IS departments:

– IS cannot work in the top-down broadcast mode, “I’m IS and I’m the expert, so here’s your solution customer”

– More than ever, IS must get input from its customers to determine the services they want, when they want them and where they want them

• Hearing directly from customers is both a goldmine and a massive challenge, especially to those with a broadcast mindset

• FEEDBACK, FEEDBACK, FEEDBACK!! ©2006 Barbara C. McNurlin. Published by Pearson Education.

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Understanding A Networked WorldWhere’s the Value in a Network?

• To leverage the Internet (or any network), it helps to understand where value is created

• When computers (or items containing computers) are not networked, each one needs to provide both front-end and back-end intelligence (coupled intelligence)

• Introduce a network and these two forms of intelligence can be decoupled, and better optimized


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Understanding A Networked WorldWhere’s the Value in a Network? cont.

• The back-end intelligence (to store and process data) is best when centralized, made robust, is stable, is standardized, and can be housed in a core-shared infrastructure

• The front-end intelligence (for interacting with the user), is most useful when it can be dispersed to a myriad of devices that can be small, mobile, customized, and specialized

• Networks allow value in four places, leading to four new kinds of businesses:

1. At the core and periphery2. In common infrastructures3. In modules4. From orchestration


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Understanding A Networked WorldWhere’s the Value in a Network? cont.1. Core and Periphery Services• Value moves to the ends– Value is in the core (leadership and strategy handled

by top management) and the periphery (customer-facing employees making decisions and taking actions) – or in the IT infrastructure and end devices

2. Common Infrastructures • Elements of any infrastructure– An organization, a system, a business process…

• That were distributed are being pulled together and operated as a utility


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Understanding A Networked WorldWhere’s the Value in a Network? cont.

3. Modules • Software, devices, organizational capabilities, and

business processes are being divided into self-standing modules so that they can quickly and easily connect to form a value chain for responding to circumstances

4. Orchestrating Modules • When modules are abundant, there’s value in being

able to bring them together


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Understanding A Networked WorldThe Rules of Networks

• Three distinguishing characteristics of e-economy:

1. It is global2. It favors soft things - intangibles, such as software,

information, ideas, and most importantly relationships - over hard things, such as trucks, steel, and cement

3. It is intensely interlinked


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The Rules of Networks cont.1. Aim for Relationship Tech.

• All about connecting– Connecting more devices to a network exponentially increases

the value of the network for everyone involved as so many new connections are created

– Today’s world is all about networks = connecting.– With unlimited connections & abundant information, the

organization is peer-to-peer rather than hierarchical– Customer & company create together on a peer-to-peer basis,

they both get smarter together & develop a closer relationship– Technology that enhances these relationships is called

relationship tech

– Company with the smartest customers wins – requires more trust from both company & customer


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The Rules of Networks cont.2. Follow the Free

• The best gets better and cheaper at the same time– The network economy is founded on this principle of decreasing price

for increasing quality – smart companies anticipate this & offer products for free

– The most valuable goods & services are those that are most abundant – they increase the value of every other one

– Netscape gave the browser away free & sold the servers. This strategy worked until Microsoft with a large market did the same thing & took away the market share

– How you make money in this market:• Aim for free, but only achieve cheap = same effect• Give away the core product & sell the service• Structure the business so that you will be profitable when your product is

free©2006 Barbara C. McNurlin. Published by Pearson Education.

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The Rules of Networks cont.3. Feed the Web First

• More important to be on the right network or network platform.– It is important to be on the right network, or network

platform – a Mac or Windows person?– A companies success depends on the standards it

chooses – choice of ERP packages & bolt-ons to then choose from

– In the network economy, enterprises will shift their focus from maximizing their own value to maximizing the value of their network

– Its to early to tell how important one wireless Internet access platform will be over another & to whom the choice will have the greatest value


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Moving Forward

• So far (this chapter) = about processes, structures and technologies

• Moving forward though, is about people• It is people who will lead us into this new

business world and the people who will be led.• First = discuss the followers• Then = what the leaders need to know to be

comfortable with talking about IT

• N.B.: Not all people have the same inclinations to use IT


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Moving ForwardUnderstanding Users• Individuals, work groups, departments, even

business units have different levels of eagerness concerning any new technology– To help them use a new technology IS needs to

understand user comfort levels• Levels of comfort with new Technology (see Figure

14-1):– Eager Beavers: The Innovators and Pioneers (.5%)– Early Adopters: The First Consumers (5%)– Early Majority: The First Big wave (30-35%)– Late Majority: The Technology Skeptics (40-50%)– Technically Averse: “Not On My Time You Don’t” (10-

15%)©2006 Barbara C. McNurlin. Published by Pearson Education.

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Moving ForwardUnderstanding Users cont.

1. Eager Beavers - The Innovators and Pioneers

• Noisiest• Everything about (technology) is wonderful (today =

wireless)– Most = in software and hardware companies where their

enthusiasm (vision?) might be an asset– Some = part of ‘Advanced Technology Group’

• Approach = support them with some funding and learn from them– ‘Bleeding edge’ companies may need to support with big $$$$


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2. Early Adopters: The First Consumers

• ‘Disciples’, not too far behind the innovators• Often have a lot of discretionary income ($$$) and think

the corporation does too!• Enterprises could miss a market by ignoring these people

• Approach = Need to be managed.• They need IS’s help and encouragement but should not

be allowed to overwhelm• Watch $$$ closely!

– Make sure they invest their own money in the experiments


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3. Early Majority: The First Big Wave

• Willing to use technology but need some help to make it happen• Not the self-sufficient pioneers or risk takers• Tend to be in relatively important positions• Make or break introduction of new technology

• Approach = Need to understand how they view the company, customers and competition; then help them choose a strategy to expand their familiarity with, say, the wireless Internet

• IS management must become adept at creating options that can be tested for acceptance or rejection


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4. Late Majority: The Technology Skeptics

• Not afraid of technology, but they do have serious concerns about risks and costs

• Concerned about wasting time and $

• Approach = IS management needs to be prepared to address risks and costs as they are to address technology opportunities

• Need to show an appreciation of ‘bottom-line’ ($) concerns and answer security questions at a level that late majority people can appreciate


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5. Technically Averse: Not on My Time You Don’t

• Resist technology e.g. not currently doing anything about the wireless Internet or Web Services

• In many cases, their concerns about loss of privacy, security, control, and possible exposure to competition override any perceived benefits of the technology– Some = industry ‘trend’ / trait

• Sunk costs etc.

• Approach = IS first needs to understand their concerns• They (may) have justifiable business fears that need to be identified

and addressed before any thought of using a new technology for business purposes can be entertained


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The Technology Camel: IS Management – The ‘Bottom Line’ • IS Department (Management) need to recognize and

acknowledge each cluster’s concerns about new technology, and then develop a multi-tiered approach to respond to the diverse concerns

– Eager Beavers: The Innovators and Pioneers (.5%)– Early Adopters: The First Consumers (5%)– Early Majority: The First Big wave (30-35%)– Late Majority: The Technology Skeptics (40-50%)– Technically Averse: “Not On My Time You Don’t” (10-15%)


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Moving ForwardIncreasing Executives’ Understanding of IT

• Finally, we end this chapter / lecture and book / unit, as we began it, on the subject of leadership

Leadership of IT is no longer a technical challenge; it is a challenge for all business managers

CIOs need to ensure that the business managers:– Stay abreast of the changes and new uses of IT– Are comfortable with IT, and – Understand its impact and potential value to the

business


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Moving ForwardIncreasing Executives’ Understanding of IT cont. • The dot-com boom and bust also had a “damaging” effect on

collective opinions about IT because many executives and venture capitalists believe the money they spent creating Websites and funding new e-businesses was wasted– New channels to the customer did not pay off

• As a result, many now de-emphasize the importance of e-commerce at the very time when early promise is being realized in many industries and sectors

• There is an e-commerce boom taking place right now, even though the hype is gone

• CIOs need to be concerned with the potential gap between what their fellow business executives believe is important about IT versus what they really need to know to effectively guide the use of IT


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Increasing Executives’ Understanding of IT cont.

Executives’ Leadership Roles

• These roles include:– Setting the tone of the enterprise toward

technology– Envisioning how IT can serve business strategy– Governing as well as leading– Using IT to promote business change, and– Assessing costs and benefits


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Current, Longstanding, and Upcoming IT Issues • The impact of new regulations is a current issue,

with a potentially huge impact

• Project management is another topic of current interest

• Measuring the value of IT is a continuing topic of interest, as is change management and organization and control of the IS organization

• Cross-organizational e-processes are areas on the verge of breaking through, as is obtaining services via the Web


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Means for Executive Learning

• These include:– Learning by doing– Learning by governing, and – Learning via educational programs


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MIT’S IT FOR THE NON-IT EXECUTIVE PROGRAMCase Example: Executive Learning • This two-day course is given three times a

year and has 60-75 attendees• The program is not about technology;

rather, it presents frameworks and a vocabulary to help non-IT managers and executives understand, in business terms, what is going on with the technology


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Moving ForwardEducating IS About the Business

• “When it comes to educating users about IT, my philosophy is that we in IS should be educating ourselves about the business environment”

• Some options– Train in the Business– Move into the Business

• Encourage direct reports to move into the business– Include an option to come back

– Lead with the Business• Get the business to take the lead on an IT project

– Attend Business Programs• Need for education in “business speak”


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SIM’S STRATEGIC BUSINESS LEADERS PROGRAMCase Example: Educating IS About the Business

• 2 day program which gives senior IS leaders a place to interact with business leaders– 1st program = “Navigating Unchartered Waters: The

Global Economy and Business Strategy”• 5 session program• 7 business + X technology (max. = 25)

– Sessions:1. Informal Getting-to-Know-You activities2. Establishing the Framework3. The Business Perspective4. Integration with the Technology Perspective5. Practical Take-Aways


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Conclusion

• We are indeed in a business revolution• With it, the use of IT is changing in kind– It has shifted from amplifying thinking and

processing to amplifying communicating and connecting

• It is now much more about relationships than transactions (which happen in the background) and are becoming increasingly sophisticated


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Conclusion cont.

• Now that this shift has been made, IT becomes about business and needs to be the responsibility of the business folks, not just technology folks

• The foundations of past ways of working are changing

• That is the exciting exploration that is going on right now, as people grapple with creating the new work environment and the challenge it presents


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Documents

The Challenges Ahead Chapter 15 Information Systems Management In Practice 7E McNurlin & Sprague PowerPoints prepared by Michael Matthew Visiting Lecturer,