Management of the IT Function

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Management of the IT FunctionOrganizational
Impacts
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IT Dept Responsibilities

• System development
• Infrastructure Maintenance
• Data/Storage Mgt
• Application Mgt (OS, Enterprise, other ISs)
• Hardware Asset Mgt
• Networking
• Basic Advanced (collab, mobile, Web)
• Computer Center operations and other facilities
• Support
• Training, Help desk/Information Center
• Planning control
• IRM strategizing and planning
• Security, Continuity
• Standards Policy making/enforcement
• Project Management

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Managing the IT Dept

• Issues
• IT function operations
• Development Strategies
• IT vs. End-User control
• How (Buy, build, reuse), Who
• Maintenance Strategies
• Infrastructure, 5 Rs and Vendor issues
• IRM planning (strategic, tactical, project)
• Funding issues - Who pays for IT?
• Structure of IT (reporting, division of labor)
• Where put IT?
• What type of employee?
• Human Resource Issues
• Reputation/Impression Management

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Infrastructure Issues

• Levels of Infrastructure
• Public (Phone, Internet, Industry)
• Inter-organizational (SCM, JPD)
• Enterprise-Wide (ex Email, Intranet, ERP)
• Business Units and HQ
• Specialized infrastructures (or past history)
• Software issues
• License vs. Buying copies
• Single copies vs. Site license (unlimited
  copying)
• Network licenses (seats)
• Hardware - lease vs. buy
• Both Acquisition, Installation, Support (TOC)

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Security and Control

• Risk assessment and preventions
• Attacks - firewall to malware vandalism
• Failures - fault tolerant, redundancy
• Security policy
• Legal requirements, orgal req
• Controls -
• access control, encrypt
• monitor/detect, train
• Integrity Controls
• Data validation, process auditing, logs
• Continuity
• Disaster planning/procedures
• Recovery procedures

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IRM Planning (strategic)

• IT can be strategic in three ways
• Improve internal operations
• Allow the firm to improve its position in the
  market
• Allow the firm to improve its relationships in
  the supply chain or with other partners
• BUT best way to achieve adv is
• thru Strategic Alignment and
• thru People IT

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Strategic Alignment
fit?
Assement of the Business
Assessment of IS Architecture
Id current Problems
(1)
(1)
link
Where Going
Business Vision
(2)
(3)
IT Vision
link
Determine new IT Architecture
What Needed
(4)
link
Business Strategic Plan
(5)
link
Project Portfolio
IT Strategic Plan
(6)
link
Business Operational Plan
Budget Schedules Objectives
(7)
link
IT Operational Plan
(8)
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Who pays for IT services?

• Overhead method
• take total cost of IT
• divide evenly across depts
• Chargeback
• bill dept for cost of each service
• IS Function as Profit Center

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Structure of IT function

• Typical departments
• Operations, Development, Support
• May have depts for each function (ex Acct IS)
• Networking is either separate or within each
• Management
• Director of each department
• Chief Information Officer
• IT or Business person?
• End-User Role
• Strategic Planning committee (top mgt)
• Steering Committee (middle mgt)
• Centralized, Decentralized or Hybrid
• Continuum in-house vs out-source

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Structure of IT

• Centralized IT
• Most IT folks in one area
• Decentralized IT
• IT folks in each sub-unit
• Distributed (hybrid)
• Each dept has some IT people or
• HQ divisions/subsidiaries
• Who does what?

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Outsource

• Which functions?
• Maintenance of hardware
• Data Entry
• Transaction processing
• Software Development or design
• Networks
• design
• maintenance
• Management
• Issues
• Agency costs
• Vendor Relationship Issues
• Vendor Management
• Service Level Agreements
• Issues when switching (lock-in)

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Insourcing

• Definition - vendor employees work in your org
• Options
• Facilities management
• Side by side
• Pros
• Greater control over IT function
• Security of information
• Reliable availability / stability
• Company culture buy-in
• Trust among IT dept and other employees

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Insourcing - Cons

• Too much organizational control
• Overwhelming responsibilities
• Work for 2 bosses
• Work sales
• Company culture buy-in
• Going Native
• Higher overhead costs
• Difficulty maintaining excellence of knowledge
  experience

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Insourcing - Cons

• Too much organizational control
• going native
• Overwhelming responsibilities
• Higher overhead costs
• Two bosses
• Resentment from in-house employees

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Determinants of Insourcing

• Is the IT department central to the core business
  and strategy?
• Could IT become a source of competitive
  advantage?
• Are IT needs complex and relatively unique or
  dynamic?
• Is current IT function satisfactory?

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Evaluation of Vendors

• Deciding which functions to outsource
• Facilities, Development, Maintenance
• Infrastructure
• Hardware/software
• Which aspect of function (service)?
• Selecting Systems/Vendors
• Request for Proposal
• Evaluate Choose frm vendor responses
• Quality/Reliability issues
• User groups
• History - recommendatons
• Negotiate Contract

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Evaluation Criteria Issues

• Hardware
• What are some?
• Ergonomics may be an issue
• Software
• What are some?
• Licenses vs. single copy prices
• Open vs. proprietary
• Version cycle

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Human Resource Issues

• Recruitment
• Is there a shortage or not?
• Alternative sources of IT people
• Educational Institutions
• Certifications
• H1B Visas, outsourcing
• Retention
• What motivates an IT person?
• Promotion
• How reward people that arent mgt material?
• Retraining
• Dealing with constant changes in
• hardware, programming languages, methodologies

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CIO Magazine survey of 495 respondents.
Top IT spending priorities Integrating systems
and processes
36 Implementing new technologies such as
wireless 26 Staff retention/hiring/training
25 External
customer service relationship Management

24 Lowering costs/meeting budgets
22 Enabling/enhancing e-commerce
21 Project management
improvement 18 Strategic
planning/aligning IS and business goals

14 Implementing data security and
privacy 14
Previous Experience on Path to CIO IT
82 Consulting
50 Administration
34 Customer service
34 Sales 30 Research and
Development 27 Finance
25 Engineering
25 Marketing
24 Manufacturing/Production
18 Other
38
How a CIO spends their time Communicating with
other business executives 33 Managing IT
staff
28 Interacting with outside
business Customers/partners/suppliers
15 Understanding
technologies
15 Talking to IT vendors
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Recommended reading list (From Tom Pike) 1.
Writing Style Manuals 2. How to Speak How to
Listen by Mortimer J. Adler 3. Strategy Pure
Simple by Michel Robert 4. The Essential Buffett
by Bill Miller 5. The Witch Doctors Making
Sense of the Management Gurus by Micklethwait
and Wooldridge 6. Dangerous Company The
Consulting Powerhouses the Businesses They
Save/Ruin by James OShea and Charles
Madigan 7. The Day The Universe Changed by James
Burke 8. Connections by James Burke 9. Rethink,
Retool, Results by Tom Pike 10. Information
Renaissance by Tom Pike 11. Smart Way to Buy
Information Technology by Brad L. Peterson
Diane M. Carco
The personal skills most important for
CIO Effective communication
70 Understanding of business
processes and Operations

58 Strategic thinking and planning
46 Thorough knowledge of
technology options 31 Negotiation
skills
19 Ability to influence/salesmanship
17 Technical
proficiency
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Project Management

• Manage constraints
• Scope
• Time
• Cost
• Quality (TQM, Six Sigma)
• Risks
• Facilitate project
• Manage processes
• Initiate, Plan, Control, Execute, Close
• Communications mgt
• Procurement

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Process Group Relationships
Plan
adjust due to elaboration
Control
update
adjust to stay on track
Execute
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Maturity levels (stages)
Continuously Improving
Optimizing
Managed
Predictable
Standard, consistent
Defined
Disciplined Process
Repeatable
Initial
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Definition of a Maturity Model

• Maturity the state or quality of being fully
  grown or developed
• Chaotic Mature
• Conceptual Framework
• Based on Industry Best Practice
• Offers organizations an opportunity
• Id areas for process improvement
• Maturity models typically have 4-5 stages
• Models have been created for many processes
• Ex Project mgt, chg mgt, software dev (CMM)
• CMM Capability of software dev group

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Comparison
CMM (development) Description PMM (project mgt)
Initial Ad-hoc operations, chaotic, NO standardization Initial
Repeatable Some procedures and policies are established Managed
Defined Processes established to increase efficiency Defined
Managed Measure and control Quantitatively Managed
Optimizing Procedures to improve procedures Optimizing
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CMM Stats as of April 2003
What level are firms?
How long does it take to move up?

• CMM 1-16.9
• CMM 2-43.2
• CMM 3-24.6
• CMM 4-8.0
• CMM 5-7.3

1 to 2 22 months 2 to 3 21 months 3 to 4 25
months 4 to 5 15 months
Level 5 organizations include NASA, Onboard
shuttle group, Boeing Defense Space Group and
IBM Federal Systems Major goal for Indian
outsourcing firms
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Organizational Impacts

• Flexibility
• Alignment

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Organizational Flexibility

• Defined -
• how quickly/radically can change when needed
• incremental vs. revolutionary change
• awareness of and adaptation to environment
• threats/opportunities
• Different forms of orgal flexibility
• Decision making flexibility
• Structural flexibility
• Product/Market flexibility
• Process flexibility

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Decision Making Flexibility

• Ability to change
• who makes decision, how make it
• Traditional Decision-making
• Top-Down decisions codified into rules
• Exceptions reported upwards
• Is this flexible?
• Impact of IT on decision making
• TPS - formalizes rules into IT
• DSS/ES - formalizes decision process
• Networking - improves communication, coordination
• KMS - distributes knowledge
• Does IT increase decision making flexibility?

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Structural Flexibility

• What is structure?
• Division of Labor
• Reporting Mechanisms org chart
• Linking Mechanisms committees, task forces
• Orgal Boundary workers inside or out?
• Employees vs. contract workers vs. agents
• Interorganizational relations
• transactional, collaborative, engulf
• What is a flexible structure?
• When need a flexible structure?
• Can IT influence structural flexibility?

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Product and Process Flexibility

• Product Flexibility
• How can IT improve ability to
• modify products created
• create new products
• find new markets
• Process Flexibility
• Can IT make it easier to change business
  processes?
• Can IT become an obstacle?

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Downsizing and Empowerment

• IT can be used to replace workers
• Especially if information conduits
• IT can increase span of control
• More effective tracking/reporting
• IT can be used to empower workers
• Act like experts
• Decision support
• When downsizing can use systems to empower those
  who are left

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Organizational Alignment and IT

• What is organizational alignment?
• Organizational change
• misalignments lead to changes
• ripple effects of change
• changes cause realignments
• changes cause new misalignments
• stability, incremental change, revolutionary
  change
• IT and alignment
• Key issue in organizations how to keep IT
  aligned with business

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Motor Vehicles Case - alignment

• Natl govt shift to business practices (macro-env)
• Hired new Director (dominant coalition)
• Changed mission (strategy)
• Current ops
• 138 registries 1 office admin Regional dirs
• Lack customer service (culture)
• Many diff lines, have to wait in each one
• If there was a problem had to go to admin
• Weeks to process (police couldnt enforce)
• Corruption (driver sch bribes, selling phony
  licenses
• OII (macro-tech)
• 2 IBM Mainframes, 14 yr old apps, regular
  failures
• Undocumented 2nd Gen lang, very patched
• Each query needed specialized programmer to do it

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Changes at DMV

• Department
• Reduced number of regions (structure)
• Each registry given authority (org design)
• Hired mgrs who could handle it (middle mgt)
• Reduced job classifications (jobs)
• Cust serv I II, supervisor, mgr
• Result - clerk as helper (role)
• Problem -- old system isnt flexible (macro-tech)
• New OII
• Single integrated network
• Open systems (Unix) - Easy to add onto
• New application
• Registries now do licensing (micro tech)
• But it is easy to audit, catch unusual patterns
  (macro tech)
• Future - interorgal systems
• Mall registry, link to weigh stns, dealers