The Top IS Job Simon Fraser University CMPT 301, Week 2, Fall 2007 Wang, Can; Email: [email protected]@sfu.ca

The Top IS Job

Simon Fraser UniversityCMPT 301, Week 2, Fall 2007Wang, Can; Email: [email protected]://www.cs.sfu.ca/CC/301/cwa50/

Outline

1111

2222 The CIO's Responsibilities

The Evolution of IS Organization

The Management of IT Organization Early days: manage the technology Then: manage the information resources Now: IT is pervasive and is a mandatory link

between enterprises Affecting every aspect of organizational

performance Leading to the formation of "business ecosystem“ IT and IS

Waves of Innovation (1)

Source: Kenneth Primozic, Edward Primozic, and Joe Leben, Strategic Choices: supremacy, Survival, or Sayonara (New York: McGraw-Hill, 1991)

Wave 1: Reducing costsBegan in the ’60sFocused on increasing the productivity of individuals and business areas by e.g. automating manual processes

Wave 2: Leveraging InvestmentsBegan in the ’70sConcentrated on more effective use of corporate assetsSystems justified on ROI, cash flow etc.

Wave 3: Enhancing Products & ServicesBegan in the '80sAttention shifted to using IT to produce revenue by gaining strategic advantage or creating entirely new businesses

Wave 4: Enhancing Executive Decision MakingBegan in the late '80sChanged fundamental structure of organizationsCreated real-time business management systems

Wave 3 & 4 must be implemented once an industry leader has set a precedent

Wave 5: Reaching the ConsumerBegan in the '90sUses IT to communicate directly with consumers New marketing, distribution and service strategiesChanges the rules of competition

Management must be involved in guiding IT use once you "cross the line"

Case Example: The SABRE System (1) Waves 1 and 2

SABRE built to reduce costs of making airline seat reservations

Wave 3 System expanded so it could be used directly by

travel agents Wave 4

System expanded to include hotels and rental cars through alliances with these suppliers

The SABRE System (2)

Wave 5 Reaching the consumer: EAASY SABRE enabled direct consumer access

from their PCs AAdvantage – frequent flyer program

Most profitable customers Web sites

A Sixth Wave?

The Waves of Innovation was postulated in 1991. What’s next?

Traditional Functions Are Being Nibbled Away (1) The traditional set of responsibilities for IS :

Managing operations of data centers, remote systems, and networks

Managing corporate data Performing systems analysis and design, and

constructing new systems Systems planning Identifying opportunities for new systems

Traditional Functions Are Being Nibbled Away (2)

Distributed systemsEver more knowledgeable usersBetter application packagesOutsourcing

Will IS Organization Be Driven into Oblivion?

?

New Roles Are Emerging (1)

IS is not a single monolithic organization, but rather a cluster of four functions Run operations Develop systems Develop architecture

Setting a strategy and maintaining an architecture for both IT and information, providing a framework or standard for system operations

Identify business requirements

Each of these functions require a different set of skills and a different management strategy

The business-oriented activities are more important to the enterprise

George Cox

New Roles Are Emerging (2)

Source: George Cox, Time to Reshape the IS Department? (Wentworth Research Program, 1991)

New Roles Are Emerging (3)---The Squeeze on Traditional IS

Activities

New Roles Are Emerging (4)---Will the IS Organization Be Squeezed into

Oblivion? The answer is negative, two roles will emerge

as dominant for IS function Outsourcers have not sufficient management

involvement to understand and satisfy all organization needs IS becomes the broker between technical service

providers and business units Enterprise IT Architecture (highly challenging,

must follow tightly business trends to stay competitive)

New Roles Are Emerging (5)---Roles for IS

Toward IS Lite (1)

IS started "centralized" and evolved into a "federal model" Some activities are handled centrally (standards,

operations etc.) Others are dispersed to business units to meet

local needs (e.g. application development)

Roger Woolfe

Toward IS Lite (2)

IT activities take place in three IT macro-processes: Driving innovation

Strategic planning, architecture design and business requirements definition

Delivering change System development and support of user changes

Supporting infrastructure Desktop support, data center and network operations

DrivingInnovation

DeliveringChange

SupportingInfrastructure

ExternalService

Providers

BusinessUnits

Toward IS Lite (3)

Four major structural trends for IS Lite Process-based working Outsourcing Specialist centers of excellence Increasing IT activity embedded in business units.

Toward IS Lite (4)

After IS Lite Driving innovation would be retained internally and mostly

centralized for coherence and exploitation across the enterprise.

Delivering change would be mostly moved out to the business units to get the benefits of being close to customers.

Supporting infrastructure would be selectively outsourced under central control for cost and efficiency

Case Example: LifeScan

Johnson and Johnson subsidiary New CIO = agenda to align the department

with the business Stage 1: IM organizations' purpose is to keep the

business running Stage 2: IM organizations work closely with

business units Stage 3: IM organizations partner with business

units and have direct influence on business strategy

Outline

1111

2222 The CIO's Responsibilities

The Evolution of IS Organization

The CIO’s Responsibilities (1)

The emphasis of the top IS job has changed Before mid 1980s: IT infrastructure Late 1980s: addressing business issues, helping

formulate corporate policy by creating a vision of IT

Early 1990s: IT as a catalyst for revamping the way enterprises worked (CIO appeared)

Late 1990s: Revamping business operations using IT continued with the Internet

The CIO’s Responsibilities (2)

Beginning of 2000s: The "technical member" of top management, ensuring e-business

2004: Emphasis on justifying IT investments, IT portfolio management

Today: the cost emphasis remains, outsourcing continues to grow, CIOs are expected to do much more with not much more money

Major IT Eras

CIO Roles in Three Eras (1)

The Mainframe Era Predominated 1960s – early ’80s Supporting role: DP, IS Manager, application delivery

Distributed Era From the end of ’70s (PC, LANS and WANS) Took on 4 more roles:

Organizational designer Technology advisor Technology architect Informed buyer

CIO Roles in Three Eras (2)

The Web Era Arose from the emergence of the Internet, and

esp. the Web as a business tool This era is still in its ‘infancy’ but add to the CIO’s

‘job’ the role of business visionary The Internet is about fundamental business change, not

technology New business models

Relationship between CEO and CIO vary along a wide spectrum

Four Aspects of the CIO Role

Leading Creating a vision by understanding the business

Governing Establishing an IS Governance structure

Investing Shaping the IT portfolio

Managing Establishing credibility and fostering change

Leading: Creating a Vision by Understanding the Business Seven approaches to understanding the

business and its environment: Encourage project teams to study the marketplace Concentrate on lines of business Sponsor weekly briefings Attend industry meetings with line executives Read industry publications Hold informal listening sessions Partner with a line executive

Concentrate on Lines of Business IT needs to server individual lines of business rather

than the entire company Supporting current operations (alignment) Using systems to influence future ways of working (impact)

Creating a Vision of the Future and Selling It Technology now has more influence in business.

CIOs need to create a vision of the enterprise's future and its use of IT and sell those ideas to others

In today's volatile environment, direction setting and short-term exploration are more appropriate than multiyear plans. Most corporate vision today has an IT underpinning

IT Governance

IT Governance The assignment of decision rights and the

accountability framework to encourage desirable behavior in the use of IT Governance is about deciding who makes decisions whereas

management is about making decisions once decision rights have been assigned

Driving force for a better IS governance structure Financial scandals Large and diverse IT expenditure

Centralizing all IT decisions is not a solution

Six Governance Styles

A business monarchy is where C-level executives (CEO, CIO..) hold the right to make decisions

IT monarchy: IT executives hold the right to make decisions

Feudal is where business unit leaders (or delegates) have decision or input rights

Federal means that the rights are shared by C-level executives and one other tier of the business hierarchy

A duopoly is where one IT group and one business group share a right

Anarchy is where individual process owners or end users hold a right

Five Decision Areas

IT principles are high-level statements about how IT will be used to create business value

IT infrastructure strategies state the approach for building shared and standard IT services across the enterprise

IT architecture states the technical choices that will meet business needs

Business application needs is where the business defines its application needs

IT investment and prioritization defines the process for moving IT-based investments through justification, approval and accountability

IT Governance Arrangements Matrix

Investing: Shaping the IT Portfolio IT investments has gained increased attention

CIOs were usually falsely blamed for making poor IT investment

Two key IT investment topics What to invest in (strategic) How to make investment decision (tactical)

IT portfolio management Systematic management of large classes of planned

IT initiatives, projects, and ongoing IT services etc.

A Strategic View of Making IT Investments (1) Intense competition in "non-regulated" industries

forced executives to innovate by investing in IT, improving their business processes and offering new products and services These innovations, in turn, increased productivity, thus

forming a virtuous circle

Innovation in IT,Products, and

Management Practices

Increased Industry

Productivity

Fierce IndustryCompetition

A Strategic View of Making IT Investments (2)

IT investments best contribute to productivity increase if Investing in main levers of productivity Getting the investment sequence and timing right Pairing new systems with new processes and

work practices that take advantage of the new IT capabilities

Targeting IT Investments

Concentrate IT spending on "levers that matter" Either increase output or decrease input "Levers that matter" differ among industry

E.g. Data warehouse for Wal-Mart

Sequencing and Timing IT Investments

---Case Examples: Wal-Mart Vs. Kmart Wal-Mart

(1) Automating the flow of products in its internal supply chain (2) Turning outward to suppliers coordinating its own operations with theirs (3) Turning to customers to better plan its merchandising mix and replenishment (4) Data warehouse

Kmart Used IT to target its marketing promotions

Result: increase in demand from successful promotions could not be met due to problems getting products into stores

Complementing IT Investments Accompanying management practices must

also be changed to unlock the potential of IT investments

A Tactical View of Making IT Investments Most companies have far more opportunities

than they can fund Must find a way to prioritize the possibilities

to best support their business' strategic objectives Prioritization Maximize the business value of their IT

investments

Establishing Credibility and Fostering Change

CIOs are in the change business But before a CIO and the IS organization will

be heard as a voice for change, the must be viewed as being successful and reliable

To foster change, a CIO must establish and then maintain the credibility of the IS organization

Establishing Credibility

The key to credibility is to manage "today" operation well Computer operations Technical support (including networks) The help desk Maintenance and enhancement of existing

systems Delivery oriented with a high level of service

Outsourcing IT support functions

Working across Organizational Lines CIOs now find that systems they implement

affect people outside their firm Supply side: fewer suppliers but deeper

relationships Customer side: need to get credibility from

customer executives to build and use inter-business systems

The Office of the CIO

The work of the CIO has become so broad and complex that it should be handled by a team Chief Information Officer (CIO)

Heads IS and works with top management, customers and suppliers

Chief Technology Officer (CTO) Heads IT planning, which involves architecture and

exploration of new technologies Chief Operations Officer (COO)

Heads day-to-day IS operations Chief Project Officer (CPO)

Oversees all projects and project managers

Whither CIOs?

Different periods of recent history have seen executives with different backgrounds “running the show” Manufacturing = in the early 1900s Sales and Marketing – 30s to 50s Finance – 70s to 90s

Problems and scandals Future – perhaps now CIOs have the most

appropriate backgrounds to run companies