1

Strategic Planningfor Information

Systems

John Ward and Joe Peppard

Third Edition

CHAPTER 8Strategic Management of IS/IT: Organizing and Resourcing

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Outlines

• Organizing strategies for IS/IT management

• Models and framework for guiding management action

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Objectives of the IS/IT Management Strategy

• To ensure IS/IT strategies, policies and plans reflect business objectives and strategies.

• To ensure potential business advantages from IS/IT are identified and exploited.

• To ensure strategies, etc. are viable in terms of business risks.

• To establish appropriate resource levels and reconcile contention/set priorities.

• To create a ‘culture’ for the management of IS/IT that reflects the corporate culture.

• To monitor the progress of business-critical IS/IT activities.

• To achieve the best balance b/w centralization and development of IS/IT decision making.

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Traditional IT OrganizationIT

Executive

Finance and admin.

Plans and control

Systems development

Operational services

Consulting Development Service

Plan Implement Deliver

Source: Luftman

5

CentralizationCIO

Administration Systems Development

Operations

Planning

Research

HR

...

...

Design

Programming

Maintenance

Data Management

...

Data Centers

Telecomm.

Help Desk

...

...

Source: Luftman

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DecentralizationCEO

VP Finanace VP Marketing VP Product ABC

Function 1

Finance IT

Function 1

Marketing IT

Function 1

ABC IT

VP Product XYZ

Function 1

XYZ IT

CIO

Source: Luftman

7

Federal or Hybrid

CEO

CIO

VP Finance

VP PLA

VP PLB

Systems development for finance

Systems development for product line A

Systems development for product line B

Administration Operations

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Benefits of Federal ModelIT vision

and leadership

Scale economics Users control

IT prioritiesLeverage standards and tools

BU ownership

Control architecture

Critical mass of skills

Strategic control synergy

Responsive to BU’s needs

Excessive $ to groupVariable standards of IT competenceReinvention of wheelsNo synergy and integration

UnresponsiveNo BU ownershipNo BU control of central overhead $Does NOT meet every BU need

Centralized IT Decentralized IT

- -+ +

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Factors for Selecting Organizational Structure

• The organization’s depend on IT• Its stage of maturity in terms of its application

portfolio• The geography of the enterprise, especially for

organizations with a global presence• Its business diversity and rate of change of the

types of business and competitive pressures in each business

• The potential benefits of synergy b/w business in both trading goods and services and information exchange

• The economics of resourcing, obtaining and deploying skills

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La Belle and Nyce

• While the business units should be responsible for applications- architecture, development and operation- certain areas should be centralized

• These included: telecommunications, hardware, software architecture, information architecture, risk management and security, shared services and utilities, and human resources.

• The activities of the units had to be coordinated with the central architecture development via ‘steering group or committee’

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Division of Responsibility: IT Architecture Management

• Function: Develop and maintain information architecture

• Central IT group: – Monitor process; provide assistance if requested

• Business unit operations– Complete business architectures defining business by

location– Complete translation of strategy into technology

requirements– Define information architecture

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Cont..

• Function: Develop and maintain application architecture

• Central IT group– Set standards, monitor process– Review architectures and report on adequacy to

Technology Committee– Ensure appropriate commonality

• Business unit operations– Define requirements and develop architecture– Coordinate b/w units for common business

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Cont..

• Function: Develop and maintain data architectures

• Central IT group– Coordinate development/establishment of

common database management process– Create/maintain corporate databases

• Business unit operations– Define requirements– Develop in accordance with standards

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Cont…• Function: develop and maintain

hardware/operating system architecture• Central IT group

– Monitor development/implementation within sectors– Develop and maintain architecture for corporate

users-support operations

• Business unit operations– Develop in accordance with corporate standards and

business requirements– Request variances as appropriate; make change

recommendations

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Cont…• Function: Develop and maintain

telecommunications architectures

• Central IT group– Develop in accordance with standards and

business requirements

• Business unit operations– Define requirements– Report performance/responsiveness problems

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Balancing IS Demand and IT Supply

• Business units receive a responsive service from decentralized IS functions

• While at the same time a corporate IS function provides group wide IT services and exerts some degree of central leadership and control of IT activities

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Summary of Structural Arrangements for IS Function in Multiple BUs

I ndependent I S/ I T activities in business units

Structural arrangements for the IS Function

Strategies for managing IS/IT activities

Advantages Critical management issues

· BUs pursue independent system initiatives

· BUs have ownership· Users control I S/ I T

priorities· Responsive to BU’s

needs

· I ntegration · Lack of quality control

of data· Variable standards of

I S/ I T competency· ‘Reinvention of wheels’

and duplication of eff ort

· Little synergy across Bus

· Managing cost

Centrally-driven I S/I T activities

· Corporate wide I S/ I T solutions imposed on BUs

· Scale economics· Control of standards· Critical mass of skill

· Politics· Unresponsive· Does not meet every

Bus’ needs· Eff ect on customer

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Cont..Structural arrangements for the IS Function

Strategies for managing IS/IT activities

Advantages Critical management issues

I nf ormal cooperation in I S/I T activities across BUs

· I nf ormal social networking b/ w the centre & Bus

· Usually brought about by movement of key I S/ I T personnel across BUs

· Awareness of I S/I T issues across the enterprise

· Coordination & direction setting

· Leaving too much to chance

‘Federalism’ (integrated I S/ I T)

· Balancing central control & BU autonomy without losing the advantage of global coordination & integration

· Group-wide I S/ I T strategy & architecture with devolution where appropriate

· Complexity· Execution· Timing· Defi ning ‘where

appropriate’

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Imperative for the Management of IS/IT: Rockart et al.

• Achieve two-way alignment b/w the business and IS/IT strategy

• Develop effective relationships with line management

• Deliver and implement new systems• Build and manage IT infrastructure• Reskill the IS function with new competencies

and knowledge• Manage vendor partnerships• Redesign and manage the federal IS

organization

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Imperative for the Management of IS/IT: Venkatraman

• He argued the need for a different approach to managing IT resources that consider the sources of value to be derived from IT resources.

• He proposed that resources should be managed as a value centre.

• The value centre is an organizing concept that recognizes four interdependent sources of value from IT resources: cost centre, service centre, investment and profit centre.

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Cont…

• The cost centre has an operational focus that minimizes risks with an emphasis on operational efficiency. Cost-centre activities are good candidates for outsourcing.

• The service centre, although still minimizing risk, aims to create an IT-enabled business capability to support current strategies.

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Cont…

• The investment centre has a long-term focus and aims to create new IT-based business capabilities. It seeks to maximize business opportunity from IT resources.

• The profit centre is designed to deliver IT services to the external marketplace for incremental revenue and for gaining valuable experience in becoming a world-class IS function.

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Imperative for the Management of IS/IT: Gartner Group

Embedded in the business

Outsourced to external service providers

1

2

3

4

5

Supply side

Demand side

1 IT Leadership

2Architecture Development

3 Business Enhancement

4 Technology Advancement

5 Vendor Management

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Cont…• IT leadership, which includes IT envisioning,

fusing IT strategy with business strategy, and managing IS resources.

• Architecture development, which is concerned with developing a blue-print for the overall IT technical design.

• Business enhancement, which includes business process analysis and design, project management and managing relationships with users.

• Technology advancement, which is application design and development.

• Vendor management, which includes managing and developing relationships with vendor and suppliers, negotiating and monitoring contracts and purchasing.

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A Framework Guiding Action

• What needs to be managed?

• Where IS/IT resources should be outsourced?

• Who should manage IS/IT?

• Coordinating mechanisms for the strategic management of IS/IT

• Define IS competency

• Managing relationships

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What Needs to be Managed?

• The activities that are traditionally seen as necessary for ‘IT’, and consequently considered as taking place within the IS function, can be portrayed as delivering a range of services to the business.– Strategy and planning services– Application development services– Application and technical services– Technology delivery and maintenance services

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Deciding on the organization of IS/IT Resources

• 2 key issues must be considered– Location of IS/IT decision rights

• What decisions should be centralized and what aspects of IS/IT management should be devolved into the business and out of the IS function?

• The organization needs to define authority, responsibilities, policies, coordinating mechanism and control procedures.

– Sourcing of IS/IT resources• Internal or interorganizational resources• The interorganizational arrangement places new

stresses, demanding additional coordination and vendor relationship management.

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Trading-offs in the Organization and Resourcing of IS/IT

Traditional IS function

Location of decision

rights

Distributed

CentralizedInternal Interorganizational

Provisioning of IS resources

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Cont…

• Organizations engaging in outsourcing at some stage identify the need to realign, change and/or develop different parts of their IS/IT structures, competencies and skills to enable them to maintain the link b/w IS/IT and business prerequisites.

• Increase the complexity in managing IS/IT

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Aspects Required for Distributing IS/IT Decision Making

• Content – the decision areas that are being managed (Table 8.4)

• Authority – the individuals or groups that have the power actually to make decisions in the various areas

• Responsibilities – the individuals or bodies responsible for day-to-day execution in decision areas. The definition of responsibility needs to be integral to each person’s job role and function

• Coordination – the mechanism and processes for ensuring coherence across all decision areas (eg. Steering committees, management groups)

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Cont…

• Policies – statements of principles or actions defining acceptable behaviour. They provide a basis for consistent decision making and resource allocation.

• Control – outlining the approached to policing decisions, ensuring conformance across the organization

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IS/IT Policies

• Restraining policies are seen as describing the rules of federation. They define the parameters within which decisions are made.

• Enabling policies relate to the dissemination of best practice.

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Enabling and Restraining Policies

• Restraining Policies– Technical compatibility

standards– Standards for buying

equipment & services– Common systems mandate– Disaster recovery, security &

quality policies– Group systems standards– Group job specifications– Any conformance to industry

standards

.

.

.

• Enabling Policies– Making group-resourced

services available to division– Negotiating volume discounts– Managing supplier

relationships– Influencing behaviour through

charge-out rules– Setting criteria for selecting

common systems– Funding share assets

.

.

.

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Provisioning of IS/IT Resources

• Insourcing – IS/IT resources are provided by a central IS function

• Outsourcing – delegation, through a contractual arrangement, of all or part of the technical resources, the human resources and the management responsibilities associated with providing IT services, to an external vendor.

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Outsourcing Rationales

• Financial and economic reasons

• Technical reasons

• Business reasons

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Classifying Sourcing Options

• Purchasing style– Transaction style refers to one-time or short-term

contracts with enough detail to be the original reference document

– Relationship style refers to less detailed, often incentive-based contracts, centred around the expectation that the customer and vendor will do business for many years.

• Purchasing focus– Resource option, organizations buy vendor resources

such as HW, SW or expertise, but manage the use of the resources in-house.

– Result option, vendors manage the delivery of the IT activities, using whatever resources are necessary, to provide the customer with specified results.

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Classifying Sourcing Options

BUY INPREFERRED

SUPPLIER

CONTRACT OUT

PREFERRED CONTRACTOR

Resource

Result

Transaction Relationship

Purchasing focus

Purchasing style

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4 Outsource Strategies• Contract out strategy - the vendor is responsible for

delivering the results of IT activity.• Buy-in strategy – the organization buy in resources from

the external market, often to meet a temporary requirement. Contracts often specify the skills required and cost, with the resources then managed in-house.

• Preferred contract strategy – organizations contract long term with a vendor to reduce risk, with the vendor responsible for the management and delivery of an IT activity or service.

• Preferred supplier strategy – this strategy takes buy-in approach further, with an organization seeking to develop a long-term close relationship with a vendor in order to access its resources for ongoing IT activities. The organization takes responsibility for managing these resources.

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Vital Competencies for Maintaining In-House

• The ability to track, assess and interpret changing IS/IT capability and relate them to organization need.

• The ability to work with business management to define the IT requirements over time.

• The ability to identify appropriate ways to use the market, specify and manage IS/IT sourcing.

• The ability to monitor and manage contractual relations.

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When to Outsource

• Position on the strategic grid

• Development portfolio

• Organizational learning

• A firm’s position in the market

• Current IT organiztion

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Position on the Strategic GridFactory- uninterrupted service-oriented information resource management

Outsourcing presumption: Yes, unless company is huge and well managed

Reasons to consider outsourcing:· Possibilities of economies of scale for small

and midsize firms· Higher-quality service and backup· Management focus facilitated· Fiber-optic and extended channel technologies

facilitate international IT solutions

Strategic information resource management

Outsourcing presumption: Mixed

Reasons to consider outsourcing:· Rescue an out-of-control internal IT unit· Tap source of cash· Facilitate cost flexibility· Facilitate management of divestiture· Provide access to technology applications and

staffing skills otherwise not available

Support-oriented information resource management

Outsourcing presumption: Yes

Reasons to consider outsourcing:· Access to higher IT professionalism· Possibility of laying off is of low priority and

problematic· Access to current IT technologies· Risk of inappropriate IT architecture reduced

· Internal IT unit not capable in required technologies

· Internal IT unit not capable in required project management skills

· Access to technology applications and staffing otherwise not available

Turnaround information resource management

Outsourcing presumption: Mixed

Reasons to consider outsourcing:

Low High

High

IT Impact on Core Strategy

IT I

mp

ac

t o

n C

ore

Op

era

tio

ns

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Development Portfolio

• Maintenance or high-structured projects=> candidate for outsourcing

• High-technology, highly structured work => strong candidate for outsourcing

• Large, low-structured projects => difficult coordination problems for outsourcing

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Organizational Learning

• A firm’s organizational learning ability influences whether it can manage an outsourcing arrangement effectively.

• Many firms’ development portfolios include a large number of projects aimed at process reengineering and organizational transformation.

• The success of both types of projects depends on having the internal staff radically change the way it works.

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A Firm’s Position in the Market

• Firms that are far behind their peers often do not have the IT leadership, staff skills, or architecture to upgrade quickly to state-of-the-art technology.

• Must go forward with contemporary practice and technology.

• A firm whose IT capabilities have become obsolete, it is not worth dwelling on how the firm got where it is but vital to determine how it can extricate itself

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Current IT Organization

• The more IT activities are already segregated in organizational and accounting terms, the easier it is to negotiate an enduring outsourcing contract.

• A stand-alone IT unit has already developed the fundamental integrating and control mechanisms necessary for an outsourcing contract

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Who should Manage IS/IT and Where should IT Report

Pluses MinusesIT directors

• Technical expertise• Accurate Systems• Sound technology• Systems integration

• IT not aligned• Education omitted• Information overload• Technical solutions

Finance directors

• Tight cost control• Department

coordination• Training costs

integrated• Strict authorization

• Not always best value for money

• Insufficient time to devote to IT

• Opportunities missed• Short-term approach

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Cont…

Pluses MinusesBusiness-unit head

• IT investments linked to the business direction

• Locally-focused systems

• Continuous development

• Shorter reporting structure

• Systems not coordinated

• Incompatibility across BUs

• Duplication of data

• Unnecessary costs incurred

Board of directors

• Strategic direction

• Appreciation of broader impact of decisions

• Major problems tackled

• Funding allocated

• Logistical details omitted

• IS/IT underexploited

• Infrastructure weak

• Slow to exploit technology

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Changing Role of the CIOApplication portfolio• Mainframe era

– Transaction processing-automation for efficiency

• Distributed era– Knowledge-worker support,

interorganizational systems, ERP systems

• Web-based and Internet era– Electronic commerce, knowledge

management, virtual organizations, supply chain re-engineering

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Cont… Senior business executive attitudes to IS/IT• Mainframe era

– IT for cost displacement and automation

• Distributed era– Increased involvement in IT issues and governance– Polarization of attitudes: IT as strategic asset or cost

to be minimized

• Web-based and Internet era– IT, particularly the Internet, viewed as

transformational– IT investments now more attractive in terms of costs

and timescales– IS/IT now part of ongoing business conversation

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Cont…

Input to business• Mainframe era

– Advisor on ‘How to do’, not ‘What to do’

• Distributed era– Access to senior executives– Invited ‘seat at table’

• Web-based and Internet era– Member of executive team having a ‘seat at the table’– Helps define ‘what to do’

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Cont…Major tasks• Mainframe era

– On-time delivery– Reliable IT operations

• Distributed era– Manage IS function– Provide infrastructure– Manage vendors

• Web-based and Internet era– Jointly develop business/IT model– Introduce management processes that leverage

technologies, particularly the Internet

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Cont…Role• Mainframe era

– Functional head– Operational manager– Deliver on promises

• Distributed era– Strategic partner– Relationship builder– Technology advisor– Align IS/IT with business

• Web-based and Internet era– Visionary– Relationship builder– Technology opportunist– Drive and shape strategy

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5 Roles for the Success CIO

• Leadership

• Visionary

• Relationship builder

• Politician

• Deliverer

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Leadership: Characteristics

• Broad business and organizational knowledge

• Broad set of relationships in the firm and the industry

• Excellent reputation and a strong track record in a broad set of activities

• Keen mind and strong interpersonal skills• High integrity and personal values• High level of motivation

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Leaders VS Managers

Vision

Strategies

Plans

Budgets

A sensible and appealing picture or the future

A logic for how the vision can be achieved

Specific steps and timetables to implement the strategies

Plans converted into financial projections and goals

Leaders define WHAT

Managers define HOW

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Profile of the CIO • Behavior

– Is loyal to the organization

– Is open in management style

– Is perceived to have integrity

• Motivation– Is goal oriented– Comfortable as a

change agent– Creative and

encourages ideas

• Competencies– Is a

consultant/facilitator– Good communicator– Has IT knowledge– Able to achieve results

through others

• Experience – Sound experience in

an IS development role (especially in system analysis)

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Coordinating Mechanisms for the Strategic Management of IS/IT

• Steering group or committee

• Reasons– Ensuring top management involvement in IS

planning– Ensuring the fit b/w IS and business strategy– Improving communication with top and middle

management– Changing user attitudes to IT

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Causes of the Problems with Steering Committee

• The wrong people involved

• The activities of the steering committee and the decisions taken have to be integrated with the overall strategy processed in the business.

• The committee has no infrastructure to support it and carry out its actions which become the strategy.

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Steering Organization for IS/IT Strategic Management

EXECUTIVE STEERING

GROUP

BUSINESS(or functional)IS STRATEGY

GROUPS

IT STRATEGY GROUP

APPLICATION MANAGEMENT

GROUPS

SERVICE MANAGEMENT

GROUPS

TECHNICAL MANAGEMENT

GROUPS

DEMAND MANAGEMENT

SUPPLY MANAGEMENT

IT-LEDBUSINESS-LED

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Responsibilities: Executive Steering Group

• Interpreting business strategy and agreeing overall IS/IT policies

• Establishing priorities, agreeing resource and expense levels, authorizing major investments

• Ensuring that strategic applications achieve their objectives

• Establishing the appropriate organizational responsibilities and relationships

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Responsibilities: Business IS Strategy Groups

• Identifying business needs, interpreting CSFs, assessing opportunities and threats and IS implications in that business area

• Prioritizing, planning and coordinating IS activities and expenditure in the area and ensuring planned benefits are delivered

• Ensuring appropriate user resources are allocated to projects and appoint application managers

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Responsibilities: IT Strategy Group

• Interpreting IT trends and developments in the context of the organization’s business

• Ensuring resources are deployed to meet business priorities

• Developing IT resources and services in line with business IS plans and monitoring the performance of those resources

• Managing the supply of technology and specialist bought-in services

• Ensuring technical risks are minimized

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Responsibilities: Application Management Groups• Identifying and specifying the needs, benefits,

business resources and costs of applications to enable management to evaluate investments and set priorities

• Managing developments and ongoing use of systems to ensure benefits are maximized

• Ensuring business changes necessary to get the benefits carried out

• Ensuring that user resources are made available as needed and used effectively on projects

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Responsibilities: Service Management Groups

• Translating business needs into technical requirements and resource implications

• Selecting the optimum means of meeting the business needs

• Monitoring performance against budgets/service levels agreed with the business

• Ensuring technical solutions are tested and quality assured to avoid application failure

• Planning the development of services and resources to meet evolving demands

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Responsibilities: Technology Management Groups• Understanding technology development,

formulating options and communicating the implications

• Assessing the capabilities of the technologies against known and potential needs

• Planning and managing infrastructure developments and migrations to minimize the risk to business applications

• Resolving technical issues/problems with suppliers and ensuring service groups are effectively supported

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Managing the IS Function

• 3 enduring challenges in the exploitation of IT– The challenge of business and IS/IT vision is

to address the need for two-way alignment b/w business and technology

– The challenge of delivery of IS services at low cost and high quality is being transformed by the evolving, vibrant service market

– The challenge of IT design architecture – the choice of technical platform on which to mount IS services

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Core IS Competencies

IS/IT leadership Integrating IS/IT effort with business purpose and activity

Business system thinking

Envisioning the business process that technology makes possible

Relationship building

Getting the business constructively engaged in IS/IT issues

Architecture planning

Creating a coherent blueprint for a technical platform that responds to current and future business

Making technology work

Rapidly achieving technical progress by one means or another

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Cont..

Informed buying Managing the IS/IT sourcing strategy that meets the interests of the business

Contract facilitation

Ensuring the success of existing contracts for IS/IT services

Contract monitoring

Protecting the business’s contractual position, current and future

Vendor development

Identifying the potential added value of IS/IT service suppliers

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Other Framework for IS Competencies

Strategy

Exploitation Supply

Define the IT Capability

Define the IS Capability

Deliver solution

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Cont…

• Strategy: the ability to identify and evaluate the implications of IT- based opportunities as an integral part of business strategy formulation and define the role of IS/IT in the organization.

• Define the IS contribution: the ability to translate the business strategy into processes, information and system investments and change plans that match the business priority- IS strategy

• Define the IT capability: the ability to translate the business strategy into long-term information architecture, technology infrastructure and resourcing plans that enable the implementation of the strategy- IT strategy

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Cont…• Exploitation: the ability to maximize the benefits

realized from the implementation of IS/IT investments through effective use of information, applications and IT services.

• Deliver solutions: the ability to deploy resources to develop, implement and operate IS/IT business solutions that exploit the capabilities of the technology.

• Supply: the ability to create and maintain an appropriate and adaptable information, technology and application supply chain and resource capacity.

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Cont…Strategy• Business strategy• Technology innovation• Investment criteria• Information governanceDefine the IS contribution• Prioritization• IS strategy alignment• Business process design• Business performance

improvement• Systems and process innovationDefine the IT capability• Infrastructure development• Technology analysis• Sourcing strategy

Exploitation• Benefit planning• Benefit delivery• Managing changeDeliver solutions• Applications development• Service management• Information asset management• Implementation management• Apply technology• Business continuity and securitySupply• Supplier relationships• Technology standards• Technology acquisition• Asset and cost management• IS/IT staff development

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Mapping Location of Resources against IS Components

Resources from IS function

Resources from ‘the business’

Technology focused

Business focused

Supply

Define the IT capability

Deliver solutions

Exploitation

Define the IS contribution

Strategy

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IS Competencies

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Hygiene Factors for Keeping Key Staff

• Training new recruits from school or university, which is expensive

• Recruiting experienced staff from other organizations, which can be risky

• Training existing non-IS people, especially in application skill in user areas, which may require the development of new job roles

• Using external resources, either on a short-term basis to overcome peak loads, or long-term to provide the organization with particular skills

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Use of ResourcesSTRATEGIC HIGH POTENTIAL

KEY OPERATIONAL SUPPORT

Train users in application-based

skills (use own resources)

Buy in expert help and transfer knowledge

IS/IT professionals

Train users in exploitation of

package software to displace IT professionals

Users

Users

Recruit and/or train specialists

Technology specialist

Outsource to release resources

Application service provider Facilities managementContractorsSoftware development

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Keen’s 4 Major Role Categories

• Business services – requiring strong business, organizational and planning skills

• Business support – business and organizational as well as some technical skills

• Development support – strong technical and good business skills

• Technical services - strong technical skills

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Managing Relationships: 3 Key Relationships (Venkatraman & Loh)

• With outside IT suppliers, who will inevitably do increasingly more of the work through outsourcing arrangement.

• With the business managers and system users, to enable the business to identify and realize the benefits from the applications investments and to obtain maximum value from the services provided.

• With IT specialists in other companies, especially trading partners

79

Internal Organizational Relationships

• Organizations contain subcultures often associated with functional specialism or geographical location.

• These subculture can be dyfunctional.• IT as a functional specialism has introduced new

subculture and one that is often difficult to reconcile with the dominant culture in the organization.=> culture gap

• This implies that the viability of the IS strategy will depend on the extent to which it is derived from the ‘shared values’ of those who have to implement the strategy.

80

6 Staged Model Regarding Shared Value

Stage 1 Adhocracy

Very few shared values since the focus of IT is internal and they are unable or unwilling to seek a coherent relationship with the business. They relate more closely to IT supplier

Stage 2 ‘Starting the foundations’

The ‘priesthood’ of IT begins to develop and IT staff perhaps cultivate a unique culture based on technology worship – often seriously at odds with the business

Stage 3 ‘Centralized dictatorship’

When IT management often reacts to business managers’ concern over ‘excessive spending’ on IT and views of poor delivery performance by becoming defensive and exerting control over what it does to redress the balance

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Cont… Stage 4 ‘Democratic dialectic and cooperation’

IT specialists recognize the need to work in cooperation with business managers toward achieving business goals, but still expect the business to cooperate with IT’s set of values

Stage 5 ‘Entrepreneurial opportunity’

Recognition in the business that IT can deliver new, potentially strategic, benefits through innovative use often leaves the IT department looking after the legacy and struggling to provide any value to the newly ‘liberated’ users

Stage 6 ‘Integrated harmonious relationship’

Rarely achieved, due to the difficulties in reconciling differing values, overcoming historical precedents and prejudice, and requiring a new openness in all aspects of IT activity

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Bridging the Gap

Leadership

Structure and Processes

Roles

Relationships

Behaviours

CIOCEO

The business

IS Function

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Models for Improving the Relationship b/w IS Function & the Business

• Earl and Sampler– Recognize disequilibrium– Emphasize supply management– Emphasizing demand management– Maintain equilibrium

• Peppard– Get the basics right– Enlist key influencers– Build credibility– Seek involvement early in project– Place responsibility for IS with business– Cultivate and maintain partnership

84

Earl and Sampler: Recognize Disequilibrium

• The organization articulates, explores and analyses the crisis or loss of confidence in IT in general and IS function in particular.

• Symptoms and prescription– Business needs not satisfied– Technological problems– Management assessment– Start of new regime

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Earl and Sampler: Emphasize Supply Management• The organization seeks radical performance

improvement of the supply side by setting delivery goals and beginning to rebuild the technology platform.

• Prescriptions– Setting ambitious performance targets– Beginning to rebuild technical platform– Seeking early, visible results– Setting application priorities

86

Earl and Sampler: Emphasizing Demand Management• Emphasizes demand management,

shifting the focus from supply to demand.• The concern is with building IT capabilities

and creating future value.• Prescriptions

– Work out the vision– Define demand management processes– Define value propositions– Plan the infrastructure

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Earl and Sampler: Maintain Equilibrium

• The organization completes the transformation process by implementing final radical changes in both demand and supply sides.

• If business or technological discontinuities occur and the company does not deal with them, it can initiate a new transformation process by returning to Stage 1.

• Prescriptions– Recognizing that it is a continuous journey– Rethinking governance– Reskilling IT personnel– Creating a partnership with business and vendor

88

Peppard’s Model

• Get the basics right– IT leadership– Get business focused– Focus on internal quality

of IT organization– Examine internal

structures and processes

– Define value-added aspect of IS/IT

– Get buy-in and commitment from all IS staff

• Enlist key influencers– Get key influencers on

board– Agree role of the IT

organization– Listen to the business– Define key priority areas– Establish relationship

roles within IT organization

– Establish service level agreements

– Open communication channels

89

Cont…• Build credibility

– Build a dialogue with business

– Address values and beliefs of business management

– Demonstrate business value

– Initiate education program to address ‘mindset’ blockages

– Initiate internal marketing programme

• Seek involvement early in project– Focus on benefits

delivery– Ensure IT involvement

early in business projects and visa-versa

90

Cont…

• Place responsibility for IS with business– Move responsibility for

IS demand out into the business

– Reframe IS/IT governance structure

– Create IT/business processes

– Define informational roles

• Cultivate and maintain partnership– Emphasis continual

communication– Revisit previous

stages

91

Managing Relationships with Vendors

• 4 critical areas that require close attention– The CIO function– Performance measurement– Mix and coordination of tasks– Customer-vendor interface

92

The CIO Function• Partnership/contract

management– An informed CIO who

monitors performance against the contract and plans for and deals with issues that arise helps an outsourcing alliance adapt to change.

• Architecture planning– A CIO’s staff must visualize

and coordinate a long-term approach to networks, HW and SW standards and database architectures

• Emerging technologies– A company must develop a

clear grasp of emerging technologies and their potential applications

– Assessing technology alternatives cannot be delegated to a third party

• Continuous learn– A firm should create an

internal IT learning environment to bring users up to speed so that they are comfortable in a climate of continuous change

93

Performance Measurement

• Companies must develop performance standards, measure results.

• Most important measures of success are intangible and play out a long period of time

94

Mix and Coordination of Tasks

• If not carefully managed, both the contracts and the different geographic locations of the outsourcing vendor’s development staff may inhibit discussion and lead to additional cost

95

Customer- Vendor Interface

• The interfaces b/w customer and the vendor are very complex and usually must occur at multiple levels.

• The senior levels, there must be links to deal with major issues of policy and relationship restructuring

• The lower levels, there must be mechanisms for identifying and handling more operational and tactical issues.

• CEO level- policy discussion• Both side need regular full-time relationship

managers and coordinating groups lower in the organization to deal with operational issues and potential difficulties