M ANAGING THE I NFORMATION S YSTEMS F UNCTION

E. Wainright Martin Carol V. Brown Daniel W. DeHayesJeffrey A. Hoffer William C. Perkins

MANAGINGMANAGINGINFORMATIONINFORMATIONTECHNOLOGYTECHNOLOGY

FIFTH EDITION

MANAGING THE INFORMATION SYSTEMS FUNCTION

© 2005 Pearson Prentice-Hall Chapter 15 - 2

Rapid technological change

Exploding applications and data

Growth in business management understanding of technology

Frequent external shocks

THE CHALLENGES FACING IS LEADERSHIP

Page 582-583


IS leadership must manage these organizational assets:

Human resources Organizational data Physical infrastructure Applications portfolio

MANAGING THE ASSETS IN AN IS ORGANIZATON

Page 583-584

Most important asset in the IS organization is its people!


Provide specialized IT training for IS professionals and others


Page 584

Developing Human Resources



Page 584-585 Figure 15.1 Selected IS Management Positions (1 of 3)

Possible IS Management Positions










Develop policies and procedures to manage an IT system’s physical assets – computer hardware and networks


Page 584

Improving the Physical Infrastructure


Infrastructure management issues addressed in policy statements:

1. Location

2. The workstation

3. Supported operating systems

4. Redundancy

5. Supported communications protocols


Page 586-588

Improving the Physical Infrastructure


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

6. Bandwidth

7. Response time on the network

8. Security versus ease of access

9. Breadth of network access

10. Access to external data services

MANAGING THE ASSETS IN AN IS ORGANIZATONImproving the Physical Infrastructure

Page 586-588


Most companies cannot operate without software applications – they are critical assets

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

MANAGING THE ASSETS IN AN IS ORGANIZATONManaging the Applications Portfolio

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


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 asset’s value


Page 588


Application portfolio policies must address:1. Assumed user

2. Application location

3. Process-driven or data-driven design

4. Evaluation criteria for new applications systems


Page 588-590


Process-Driven Design Collects, manipulates,

and stores only data needed to operate a particular process

Most often used in the past

Data-Driven Design Concentrates on all

data needed and collects into database

Each application accesses common database for needed information

Managing the Applications Portfolio

Page 589-590



Ten key issues:1. Developing effective change management system (Chapter 12)

2. Ethical use of IT (Chapter 16)

3. Agreeing upon the role of the IS organization

4. Selecting effective IS leadership

5. Creating an active partnership with business managers

6. Determining an outsourcing strategy

7. Designing an equitable financing system

8. Deploying global information systems

9. Designing an appropriate IS organization and governance system

10. Ensuring regular performance measurement

INFORMATION TECHNOLOGY MANAGEMENT SYSTEM ISSUES

Page 590-591


IS organization: Role is continually changing

Needs a mission statement

Must be future-oriented while fulfilling today’s requirements

Must be aligned closely with business activities

1. Agreeing Upon the Role of the IS Organization

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



Page 591


IS organization is also expected to: Be steward of organization’s 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


Page 592



Chief Information Officer (CIO): A member of executive management team Needs mix of business and technical knowledge Guides and unifies entire organization’s 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

2. Selecting Effective IS Leadership

Page 593-594



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 unit’s role and position Guiding systems development by business managers Managing organizational data as an asset Measuring IS effectiveness Integrating information technologies Developing systems personnel

2. Selecting Effective IS Leadership

Page 594-595



3. Creating an Active Partnership with Business Managers

Page 595


Partnership – a critical strategy based on sustaining a long-term relationship between IS and business management


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

3. Creating an Active Partnership with Business Managers

Page 595



4. Determining an Outsourcing Strategy

Page 595


Outsourcing – hired outside services to perform some of a company’s IS operations

Application service providers (ASPs) – provide total systems to organizations, ranging from competitive intelligence systems to broad ERP applications


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

Page 596-597



Key factors in selecting an outsourcing vendor: Vendor reputation Quality of service Flexible pricing

Page 596-597



5. Designing an Equitable Financing System

Page 598


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



Page 598


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

© 2005 Pearson Prentice-Hall Chapter 15 - 29 Page 598


Measuring Benefits No simple way to measure value

added benefits of IT Can track IS performance measures

over time



Controlling IS Costs Use IS organization’s budget Divide costs:

Personnel Equipment and software Outside services Overhead



Chargeback Systems

IS chargeback process – places control of IS spending with business managers, and is used to better understand true costs



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



Page 598


Successful chargeback systems must be: Understandable Timely Controllable Accountable Clearly linked to benefits Consistent with IS and organizational goals


6. Deploying Global Information Systems

Page 600-601


Region and country issues influencing global IT management:

1. Country telecommunications infrastructures2. Legal and security considerations3. Language and culture4. Time zone differences



Page 602


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



Page 603


Global team manager traits: Multiculturalist E-facilitator Recognition promoter Internationalist Traveler


7. Designing an Appropriate IS Organization and Governance System

Page 603-604


Figure 15.8 Classic IS Organization Structure



Page 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

© 2005 Pearson Prentice-Hall Chapter 15 - 39 Page 605 Figure 15.9 Common Designs for the IS Organization

Centralized Decentralized Federal Customized



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

© 2005 Pearson Prentice-Hall Chapter 15 - 41 Page 606 Figure 15.10 Four Types of IS Governance Mechanisms


8. Ensuring Regular Performance Measurement

Page 606


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



Page 607


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

Figure 15.11 IS Evaluation Criteria



Page 608


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

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M ANAGING THE I NFORMATION S YSTEMS F UNCTION