Ch15 Final

MANAGING INFORMATION TECHNOLOGY
FIFTH EDITION
CHAPTER 15
MANAGING THE INFORMATION SYSTEMS FUNCTION

E. Wainright Martin Carol V. Brown Daniel W. DeHayes Jeffrey A. Hoffer William C. Perkins
THE CHALLENGES FACING IS LEADERSHIP

Rapid technological change Exploding applications and data
Growth in business management understanding of technology

Frequent external shocks
2005 Pearson Prentice-Hall
Chapter 15 - 2
Page 582-583
MANAGING THE ASSETS IN AN IS ORGANIZATON

IS leadership must manage these organizational assets:
Human resources Organizational data Physical infrastructure Applications portfolio
Chapter 15 - 3
Page 583-584

Developing Human Resources
Provide specialized IT training for IS professionals and others
Chapter 15 - 4
Page 584

Possible IS Management Positions
Chapter 15 - 5
Figure 15.1 Selected IS Management Positions (1 of 3)
Page 584-585

Chapter 15 - 6
Page 584-585

Chapter 15 - 7
Page 584-585

Improving the Physical Infrastructure
Develop policies and procedures to manage an IT systems physical assets computer hardware and networks
Chapter 15 - 8
Page 584

Infrastructure management issues addressed in policy statements:

1. 2. 3. 4. 5. Location The workstation Supported operating systems Redundancy Supported communications protocols
Chapter 15 - 9
Page 586-588

Infrastructure management issues addressed in policy statements (cont.):

6. 7. 8. 9. 10. Bandwidth Response time on the network Security versus ease of access Breadth of network access Access to external data services
Chapter 15 - 10
Page 586-588

Managing the Applications Portfolio
Most companies cannot operate without software applications they are critical assets
Just as physical infrastructure, software portfolio needs managed as an asset
Chapter 15 - 11
Page 588

A company must know:

What software it owns Where it is located What it does How effective it is What condition it is in
Chapter 15 - 12
Page 588

Policies and guidelines must exist for the development and maintenance of IS applications Maintenance should be treated as an activity necessary to preserve an assets value
Chapter 15 - 13
Page 588

Application portfolio policies must address:

1. 2. 3. 4. Assumed user Application location Process-driven or data-driven design Evaluation criteria for new applications systems
Chapter 15 - 14
Page 588-590

Process-Driven Design
Collects,
Data-Driven Design
Concentrates
manipulates, and stores only data needed to operate a particular process Most often used in the past
on all data needed and collects into database Each application accesses common database for needed information
Chapter 15 - 15
Page 589-590
INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Ten key issues:
1. 2. 3. 4. 5. 6. 7. 8. 9. Developing effective change management system (Chapter 12) Ethical use of IT (Chapter 16) Agreeing upon the role of the IS organization Selecting effective IS leadership Creating an active partnership with business managers Determining an outsourcing strategy Designing an equitable financing system Deploying global information systems Designing an appropriate IS organization and governance system 10. Ensuring regular performance measurement
2005 Pearson Prentice-Hall Chapter 15 - 16
Page 590-591

1. Agreeing Upon the Role of the IS Organization
IS organization:
Role is continually changing
Needs a mission statement

Must be future-oriented while fulfilling todays requirements
Must be aligned closely with business activities
Chapter 15 - 17
Page 588-590

IS organization is expected to:

Demonstrate business understanding and maintain close communication with business managers Respond quickly to changing business needs Help reengineer business processes to be more customer responsive Ensure business can participate in e-commerce Keep final customer in mind Build systems that provide direct customer benefit Help business managers make better decisions with information Use IT for competitive advantage Help business integrate IT
Chapter 15 - 18
Page 591

IS organization is also expected to:

Be steward of organizations IT resources Deploy IT resources throughout the organization Facilitate productive use of resources Lead development of information vision and IT architecture Communicate vision and architecture Maintain managerial control over important information resources Administer corporate data Make current and new IT available at lowest possible cost Help business managers know and use technology Develop partnership with business managers to exploit technology
Chapter 15 - 19
Page 592

2. Selecting Effective IS Leadership
Chief Information Officer (CIO):

A member of executive management team Needs mix of business and technical knowledge Guides and unifies entire organizations IT resources Masters understanding of business, products, vendors, sales channels, customers, and competition Recognize IT advantages and where to apply Hires good people and delegates Works with executive management team to achieve competitive advantage
Chapter 15 - 20
Page 593-594

2. Selecting Effective IS Leadership
Senior IS Management Issues:

Improving data and IT planning, especially linking IS to the business Gaining business value through IT Facilitating organizational learning about and through IT Refining the IS units role and position Guiding systems development by business managers Managing organizational data as an asset Measuring IS effectiveness Integrating information technologies Developing systems personnel
Chapter 15 - 21
Page 594-595

3. Creating an Active Partnership with Business Managers Partnership a critical strategy based on sustaining a long-term relationship between IS and business management
Chapter 15 - 22
Page 595

3. Creating an Active Partnership with Business Managers
IS steering committee or advisory board used to:

Ensure frequent interaction Set priorities Check progress Allocate scarce resources Communicate concerns Provide education Develop shared responsibility
Chapter 15 - 23
Page 595

4. Determining an Outsourcing Strategy Outsourcing hired outside services to perform some of a companys IS operations Application service providers (ASPs) provide total systems to organizations, ranging from competitive intelligence systems to broad ERP applications
Chapter 15 - 24
Page 595

Outsourcing:
Allows an organization to pay only for what it uses Trend might relate to the position of the CIO Popular, largely due to:

Fast pace of technological change Dissatisfaction and costs related to past in-house services
Must be both a remedy for service failures or costs and a strategic choice Should not be used for strategic information systems with security or privacy issues
Chapter 15 - 25
Page 596-597

Key factors in selecting an outsourcing vendor:
Vendor reputation Quality of service Flexible pricing
Chapter 15 - 26
Page 596-597

5. Designing an Equitable Financing System Typical measures used to track IT costs:
Total IT budget as percentage of total organization revenues or income Total IT budget as percentage of total organization budget IS personnel costs as percentage of total organization professional personnel salaries and wages Ratio of hardware and software costs to IS personnel costs Costs for IT hardware and software per managerial or knowledge worker
Chapter 15 - 27
Page 598

5. Designing an Equitable Financing System
Why is it hard to measure IT costs?

Some IT costs are hidden No relationship to benefits included in these measures Benefits may happen after development costs occur
Chapter 15 - 28
Page 598

Measuring Benefits No simple way to measure value added benefits of IT Can track IS performance measures over time
Chapter 15 - 29
Page 598

Controlling IS Costs
Use IS organizations budget Divide costs:

Personnel Equipment and software Outside services Overhead
2005 Pearson Prentice-Hall Chapter 15 - 30
Page 598

Chargeback Systems
IS chargeback process places control of IS spending with business managers, and is used to better understand true costs
Chapter 15 - 31
Page 598

Why use a chargeback system?

Assign costs to those who consume Control wasteful use of IT resources Overcome belief that IT costs unnecessarily high Provide incentives using subsidy Change IS to be more business driven Encourage managers to be knowledgeable consumers
Chapter 15 - 32
Page 598

Successful chargeback systems must be:

Understandable Timely Controllable Accountable Clearly linked to benefits Consistent with IS and organizational goals
Chapter 15 - 33
Page 598

6. Deploying Global Information Systems
Region and country issues influencing global IT management:

1. 2. 3. 4. Country telecommunications infrastructures Legal and security considerations Language and culture Time zone differences
Chapter 15 - 34
Page 600-601

Key trends of global outsourcing:
Offshore development centers permanent offshore presence Near-shore sourcing outsourcing to countries close to home and overlapping time zones Multisourcing relying on multiple service providers in a number of companies, based on price and skills
Chapter 15 - 35
Page 602

Global team manager traits:

Multiculturalist E-facilitator Recognition promoter Internationalist Traveler
Chapter 15 - 36
Page 603

7. Designing an Appropriate IS Organization and Governance System
Chapter 15 - 37
Figure 15.8 Classic IS Organization Structure
Page 603-604

Types of IS Organizational Design:

Centralized IS applications and resources housed, managed, and controlled centrally Decentralized business units have complete control of their own IS resources Federal attempt to achieve benefits of both centralized and decentralized Customized mixed design in large enterprises where each division determines best design for that division
Chapter 15 - 38
Page 604
Centralized Decentralized Federal Customized
Chapter 15 - 39
Figure 15.9 Common Designs for the IS Organization
Page 605

Organization design depends on:

How rest of business is organized Type of customer markets, products, and geographical spread Role of IT within the organization Reporting level of most senior IS leader Types of technologies managed by IS organization
Chapter 15 - 40
Page 605
Chapter 15 - 41
Figure 15.10 Four Types of IS Governance Mechanisms
Page 606

8. Ensuring Regular Performance Measurement
Necessary for internal customers to regularly evaluate IS organization Need to show if promised cost savings are realized Required:

Agreement on measurable criteria Metrics to judge work quality
Chapter 15 - 42
Page 606

8. Ensuring Regular Performance Measurement IS Evaluation Criteria

Meeting business objectives Responding rapidly and economically to new needs Expanding business or services Developing an architecture and plan Operating reliable and efficient technology resources Focusing on the customer Providing quality IS staff Reducing size of backlog Satisfying users Adopting new technologies
Chapter 15 - 43
Figure 15.11 IS Evaluation Criteria
Page 607

8. Ensuring Regular Performance Measurement
Other measures to evaluate IS performance:
Service level agreements with internal business units can be used to evaluate IS performance Annual surveys for each major system User satisfaction surveys
Chapter 15 - 44
Page 608

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MANAGING INFORMATION TECHNOLOGY

MANAGING THE INFORMATION SYSTEMS FUNCTION

THE CHALLENGES FACING IS LEADERSHIP

Growth in business management understanding of technology

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

Provide specialized IT training for IS professionals and others

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

Figure 15.1 Selected IS Management Positions (1 of 3)

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

Figure 15.1 Selected IS Management Positions (2 of 3)

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

Figure 15.1 Selected IS Management Positions (3 of 3)

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

Infrastructure management issues addressed in policy statements:

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

Infrastructure management issues addressed in policy statements (cont.):

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

Just as physical infrastructure, software portfolio needs managed as an asset

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

A company must know:

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

Application portfolio policies must address:

2005 Pearson Prentice-Hall

MANAGING THE ASSETS IN AN IS ORGANIZATON

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Needs a mission statement

Must be aligned closely with business activities

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

IS organization is expected to:

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

IS organization is also expected to:

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Chief Information Officer (CIO):

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Senior IS Management Issues:

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

IS steering committee or advisory board used to:

2005 Pearson Prentice-Hall

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES