The StrategicManagement of

InformationTechnology

Chapter 13Chapter 13Organizing Information Organizing Information

Systems ResourcesSystems Resources

Transaction Processing Transaction Processing SystemSystem

Input OutputProcess

Information

Communication

Systems Development

Object-Oriented ApproachObject-Oriented Approach Catalog objects

– Found by keywords

– In a Library or Database Objects

– Exhibit certain behaviors

– Attributes and operations are encapsulated or pulled together

– Operations describes how attributes are processed

– Behave in certain ways in response to messages

Object-Oriented ApproachObject-Oriented Approach Classes

– Set of Objects that share common structure and behavior

Inheritance– Objects receive attributes and operations from other

objects

– Add more attributes and operations of their own Polymorphism

– Ability of object to respond to and implement each object

An Integrated SystemAn Integrated System

Research Directions:Research Directions:Systems DevelopmentSystems Development

Object/Oriented Programming Client/Server Technology Project Management

Object/OrientedProgramming Client/Server

Technology

ProjectManagement

Research Directions:Research Directions:Systems Development:Systems Development:

Object/Oriented ProgrammingObject/Oriented Programming Defining Objects, Classes, and Use Cases Identifying:

– Objects

– Components

– Applets

Expediting Code Process – Reuse

– Data Repositories

– Data Libraries

Object/OrientedProgramming

Client/ServerTechnology

ProjectManagement

Research Directions:Research Directions:Systems Development:Systems Development:

Client/Server TechnologyClient/Server Technology

Local Area Network Implementation– Novell

– Unix

– Windows/NT

Mail and Database Considerations Internet Linkages Three-Tier and Two-Tier Architectures

– Mainframe

– LAN

– Personal Computer

Object/OrientedProgramming

Client/ServerTechnology

ProjectManagement

Research Directions:Research Directions:Systems Development:Systems Development:Project ManagementProject Management

Breaking Development Process into:– Tasks– Summary Tasks– Milestones

Tracking Development Process – Cost– Resources– Duration– Time– Completion

Project Management Tools– Microsoft Project– AllClear– Project Workbench

Object/OrientedProgramming

Client/ServerTechnology

ProjectManagement

Business IntegrationBusiness Integration

Business integration is a process, not a project

People need time to change Recognize the potential up front Make job changes throughout the

organization Manage the pace of change

Transition from “Art” Transition from “Art” to a More Structured Approachto a More Structured Approach

Implement systems planning and project management techniques. Stress systems analysis to define user requirements. Develop alternative conceptual systems designs for evaluation and selection

before making a major commitment to detailed design, technology acquisition, and software development.

Design all systems components functionally, including technology and controls, for further review, evaluation, and implementation.

Use the detailed functional design as a blueprint or guide in applying software designing, coding, and testing.

Use a coordinated, planned approach to systems implementation. Prepare clear, complete, and current documentation. Perform a postimplementation review. Design for and perform systems maintenance.

Two Organizational SystemsTwo Organizational Systems

An information link is a value-added chain between two organizations, such as between a dealer and a manufacturer, used after the two organizations have established a relationship

An electronic market is a computerized marketplace with several buyers and several sellers, with someone acting as the market intermediary.

Business IntegrationBusiness Integration

Guiding vision is put in its place Program management is given proper

support Underlying technical problems are tackled

fully and early enough People are given the appropriate help in

changing the way they work

The Difference Between a Product-Line Approach and a The Difference Between a Product-Line Approach and a Customer Segmentation Approach to MarketingCustomer Segmentation Approach to Marketing

In the product line approach (technology-driven), products are spawned from the technology to create wants, while in the customer segmentation approach (market-driven), products are assembled to meet predetermined needs of customer segments.

In the product line approach, the systems development and the delivery function (marketing) are the responsibility of the managers of technology. Product marketing by the producers in a popular structure for entrepreneurial products (leading edge technologies) and organizations in early growth.

In the customer segmentation approach, the delivery function (marketing) is customer-oriented and market-driven (instead of technology-driven). Products are developed to meet well defined needs by employing only those technologies that are necessary to do so.

Five responsibility Areas in the Five responsibility Areas in the Leadership Role for CIO’sLeadership Role for CIO’s

Understand the business Establish credibility of the systems department Increase the technological maturity of the firm Create a vision of the future and sell it Implement an information system architecture

Seven ways to Seven ways to “Learn the Business”“Learn the Business”

Have project teams study the marketplace Concentrate on lines of business Sponsor weekly briefings Attend industry meetings with line executives Read industry publications Hold informal listening sessions Become a “Partner” with a line manager

VisionVision

A Vision is a statement of how someone wants the future to be or believes it will be; it is used to set direction for an organization.

Strategies tell how someone is going to get somewhere; it is their plan for the future.

Boeing’s Three VisionsBoeing’s Three Visions

The right part in the right place at the right time. Create an enhanced information stream Define a strategic business architecture

Five Waves of InnovationFive Waves of Innovation

Wave 1: Reducing cost Wave 2: Leveraging investments Wave 3: Enhancing products and services Wave 4: Enhancing executive decisionmaking Wave 5: Reaching the consumer

Five Attitudes CEOs Take Toward ITFive Attitudes CEOs Take Toward ITWilson’s StudyWilson’s Study

The majority of CEOs interviewed -- 52% to be exact -- are neutral, believing they do not have enough knowledge to direct IT investments.

Quadrant 1: CEOs in this category have a high degree of confidence in receiving benefits from IT investments. 12%

Quadrant 2: CEOs in this category are well aware that implementation problems can destroy that potential. 26%

Quadrant 3: CEOs countered here are pessimistic about IT, believing that all systems will be delivered over-budget. 8%

Quadrant 4: CEOs in this category believe that IT is harmful because it introduces chaos and too much change for people to cope well. 2%

Major Roles for Systems DepartmentsMajor Roles for Systems Departments

An increasing trend to outsourcing The appearance of high-impact projects by high-

caliber SWAT teams

Relationships for CIOs (Keen)Relationships for CIOs (Keen)

Cooperative external relationships Partnerships between systems and senior

management Partnering between systems professionals

and users

Marketplace ChangesMarketplace Changes

The quality imperative Consumer computing Deregulation of some major industries Crossing industry boundaries Traditional customers are “leaving” Crossing national boundaries Production is becoming global New product and service development cycles are

shortening

Two Ways Companies and Alliances Two Ways Companies and Alliances Compete with Information TechnologyCompete with Information Technology

To Stay in Business Quality Service Innovation Speed

To Gain Market Share Competing With Time Total Quality Management Customer is King Innovate or Die

Wiseman’s Approach to Wiseman’s Approach to Strategic ThrustsStrategic Thrusts

Differentiation Cost Innovation Growth Forming alliances

TELOSTELOS Technical Feasibility Economic Feasibility Legal Feasibility Operational Feasibility Schedule Feasibility

Unsuccessful SystemsUnsuccessful Systems Systems were developed which did not support business strategies

and objectives. Poor systems planning and inadequate project management. Failure to define or understand user requirements. Negligence in estimating costs and benefits of the systems project. Creation of a myriad of design defects and errors. Acquisition of computers and software that no one needs or knows

how to use. Installation of incompatible or inadequate technology. Negligence in implementing adequate controls. Development of unstructured, unmaintainable software. Inadequate implementation tasks.

SMDSSMDS Switched Multimegabit Data Services is a

switched service for MANs that uses cell relay technology. – The service is now being offered by local telephone

companies and promoted for linking LANs within metropolitan areas.

– Long distance carriers are also looking into offering it between MANs, as is Stanford University to transfer medical images (such as CAT scans) and earth resources mapping images among buildings on the campus

Characteristics of Characteristics of Interorganizational SystemsInterorganizational Systems

At least two parties to create an IOS, thus the partners in the venture must have a willingness to cooperate and the ability to perform the work.

Standards play a major role in permitting many IOS efforts to get off the ground.

Education of potential partners is often more of a hurdle than the technology.

Coordination of joint systems often entails using a third party. The various efforts need to be synchronized. Work processes are often re-evaluated. Technical issues are minor compared to the relationship issues. IOS often requires more openness than traditional system development.

InteroperabilityInteroperability

The capability for different machines, using different operating systems, on different networks to work together on tasks-exchanging information in standard ways without any changes in the command language or in functionality and without physical intervention.

Investment Strategy Analysis Investment Strategy Analysis Approach To Studying Approach To Studying

Current ExpedituresCurrent Expeditures

The true “intensity of beliefs” about the use of technology, says Norton. It allows the managers to stand back from the business, see where the investments are currently being made, and then decide where they should be made in order to align the information systems investment with the business strategy.

Problem-Solving Approach to Problem-Solving Approach to Information SystemsInformation Systems

Techniques that can be used to enhance several I/S/ planning approaches.

Recognizing the problem, analyzing problem information to develop a useful problem definition, generating solutions, and selecting and implementing a solution.

Opportunity identification Nonlinearity and recursiveness of the model, and the

identification of a variety of creativity techniques for each problem-solving phase.

Couger’s three variants to the classical method

Critical Success Factors in the Critical Success Factors in the Systems Planning ProcessSystems Planning Process

Critical success factors are the few key areas of the job where things must go right in order for the organization to flourish. Factors are critical for accomplishing the objectives, and are also used to determine the prime measures for satisfying each factor.

Examples of Distributed Systems StructuresExamples of Distributed Systems Structures

A hierarchy of processors is the most familiar data processing structure, with a large, controlling computer at the top of the hierarchy and PCs or terminals at the lowest level. The important characteristic of its structure is that the mainframe, or host computer, is the central, and controlling, component.

Decentralized stand-alone systems do not really form a distributed system at all. They are basically a holdover from the 1960s, when departments put in their own departmental computers, with no intention of connecting them to other systems. Hence, they are decentralized, not distributed.

Systems based on a local area network (LAN) have become widely used as the basis for distributed systems. This approach began in the office system arena with LANs providing the links between PCs, print servers, and gateways to other networks. This structure has no hierarchy, processors communicate on a peer-to-peer basis.

LAN-based systems that communicate with mainframe-based systems another structure for distributed systems. It is essentially a combination of the hierarchy approach (for mainframe-based processing) and the LAN-based system (in offices).

Cooperative systems are the newest member of the distributed system family. A cooperative system melds and extends the previous approaches. All the components are linked to each other via interconnected LANs and wide area networks (WANs). In essence it is an internet-a network of networks. All machines are equal; no machine is at the hub.

Key Messages for Managers and AnalystsKey Messages for Managers and Analysts

Process innovation is a new and desirable approach to transforming organizations and improving their performance

An explicit approach to process innovation is important Information and information technology are powerful tools for

enabling and implementing process innovation How a firm approaches organization and human resources is

critical to the enablement and implementation of innovative processes

Process innovation must occur within a strategic context and be guided by a vision of the future process state

Innovation initiatives can benefit all manner of processes

Scenario Approach to PlanningScenario Approach to Planning

A way to manage the assumptions required for planning by creating scenarios that combine trends, events, environmental factors, and the relationships among them.

Scenarios should Include:Scenarios should Include:

BUSINESS ENVIRONMENT GOVERNMENT AND SOCIETY PEOPLE CHANGES FINANCIAL CONSIDERATIONS TECHNOLOGY

High

LowLow High

Five. Business scope redefinition

Four. Business network redesign

Three. Business process redesign

Two. Internal Integration

One. Localized exploitation

Revolutionary levels

Evolutionary levels

Range of potential benefits

Enablers InhibitorsTechnological•Favorable cost- performance trends•Vendor push--system solutions

Organizational•Localized impact•Ease of assessing efficiency benefits•Minimal disturbance to operations

Technological•Obsolescence•Further reduction in cost-performance

Organizational•Lack of strategic vision•Unwillingness to recognize the strategic role of IT and IS

IT-induced reconfiguration:

Level One

Enablers InhibitorsTechnological•Favorable cost- performance trends

Organizational•Awareness of the power of IT•Willingness to make quantum changes to fully exploit IT power

Technological•Uncertainty•Cost of redesign

Organizational•Lack of strategic vision for redesign•Organizational inertia•Costs of transforming the organization

IT-induced reconfiguration:

Level Three

Marketplace•Competitive pressures

Tightly coupled

Business governance

Loosely coupled

Common role

Unique role

Information technology governance

Collaborative advantage

Business network redesign

Electronic infrastructure

Competitive advantage

Enablers Inhibitors

•Ability to specify and/or create standards for integration

•Identification of value-added services

•Recognition of mutual benefits

•Lack of standards

•Lack of vision and understanding

•Lack of commitment to integration

•Possible erosion of market positions

IT-induced reconfiguration:

Level Four

Technology Enablers and Inhibitors

Three Phases of Business TransformationP

erfo

rman

ce F

ocus

TRANSITION BARRIERS

Phase 1Automation

Phase 2Enhancement

Phase 3Redefinition

NEW CORE COMPETENCE

VALUE-ADDED PROCESSES

AND SERVICES

EXCELLENCE

EFFICIENCYINTERNAL OPERATIONS

CUSTOMER AND SUPPLIER INTERFACE

NEW BUSINESS UNITS

Organizational Focus

Boundary transforming technologies

ENTERPRISE

RELATIONS

MARKET

-OSS

-ENVIRONMENTAL SCANNING

-INFORMATION GATEWAYS

BOUNDARY

-INFORMATION REFINERIES

Attributes of InnovationsAttributes of Innovations

Relative advantage - The innovation is technically superior (in terms of cost, functionality, “image”, etc.) than the technology it supersedes.

Compatibility - The innovation compatible with existing values, skills, and work practices of potential adopters.

Complexity - The innovation is relatively difficult to understand and use.

Trialability - The innovation can be experimented with on a trial basis without undue effort and expense; it can be implemented incrementally and still provide a net positive benefit.

Observability - The results and benefits of the innovation’s use can be easily observed and communicated to others.

Economic Factors Impacting Economic Factors Impacting Technology Adoption Technology Adoption

Prior Technology Drag - A prior technology provides significant network benefits because of a large and mature installed base.

Irreversibility of Investments - Adoption of the technology requires irreversible investments in areas such as products, training, and accumulated project experience.

Sponsorship - A single entity (person, organization, consortium) exists to define the technology, set standards, subsidize early adopters, and otherwise promote adoption of the new technology.

Expectations - The technology benefits from an extended period of widespread expectations that it will be pervasively adopted in the future.

Technology Forecasting

Competitive Analysis

Assessment of Effectiveness

Models and Architectures

Initiative Identification and

Justification

Implementation Plans and

Measurement

Business and IT Alignment

Strategic Process Elements

Culture and Commitment

Systems Maintenance PhaseSystems Maintenance Phase

Systems Plan Report Systems Analysis Report General Systems Design Report Systems Evaluation and Selection Report Detailed Systems Design Report Systems Implementation Report

PrototypingPrototyping

User requirements Input, output, and transactions Databases Controls Technology Applications

Four Types Of Documentation

Systems Documentation Software Documentation Operations Documentation User Documentation

Information Engineering Methodology (IEM)

Systems Planning Systems Analysis Systems Design Systems Construction and Implementation

Changes in Traditional EnvironmentsChanges in Traditional Environments

Many organizations are emphasizing teams to accomplish major tasks and projects.

Information workers are increasingly mobile. Organizations are examining what they should do internally,

and what should be done by some other organization. Corporations are shifting their emphasis from financial

capital to human capital. New forms of self-managing groups are appearing. A coming labor shortage will result in more jobs for women,

part-time older people, and the poor and disadvantaged.

According to Naisbitt and Aburdene

Procedure-Based vs. Goal-Based Procedure-Based vs. Goal-Based Information SystemsInformation Systems

Procedure-Based Activities: Tend to consist of high volumes of transaction in which each has relatively

low cost or value. Are based on well-defined procedures (or algorithms) where the outputs are

well-defined too. Are based on the handling of data.

Goal-Based Activities Tend to handle fewer transactions of higher value or cost. Are based on ill-defined processes (or heuristics) and the outputs are less

defined as well. Tend to focus on defining the problems and the end results or goals with

effectiveness stressed in achieving them. Are based on the handling of concepts.

Three Components of the Three Components of the Marketing ModelMarketing Model

A set of technologies that represent products, developed by the systems department in an organization

A set of users of the technology who we can view as customers for these products

A delivery mechanism for developing, delivering, and installing these systems that is analogous to marketing activities

Main Purpose of Each of the Three Groups in Mead’s Main Purpose of Each of the Three Groups in Mead’s Current Information Resources OrganizationCurrent Information Resources Organization

Information Resources Planning and Control Department - the corporate perspective for information systems planning to ensure that Mead’s information resources plans meshed with business plans, and acted as planning coordinator to help various groups and divisions coordinate their plans with corporate and information resources plans.

Information Services Department - computer operations, development of corporate-wide systems, provided technical services, and furnished all the telecommunications services to the company

Decision Support Applications (DSA) Department - all end user computing support for the company