TheEvolvingRoleofIS_ITinOrganizations_AStrategicPerspective

1、The Evolving Role of IS/IT in Organizations : A Strategic PerspectiveCHAPTER 1Strategic Planningfor InformationSystemsJohn Ward and Joe PeppardThird EditionMost organization (all sectors) dependent on their ISIntroductionIT has become inextricably intertwined with business (Rockart, 1988)Depends on

2、the effective applications of ITWith e-Commerce, use of technology is accepted (indeed expected) way of conducting businessSupport existing business operations. Source for competitive advantageIS & IT needs to be managed strategically Helpful to understand how the role of technology-based IS has evo

3、lved in organizations.Less strategic approach legacy systemLearning from experience the success and failures of the past is one of the most important aspects of strategic management.Forces Affecting the Pace & Effectiveness of Progress in Using IT/IS & in Delivering Business Benefits:-The capabiliti

4、es of the technology;The economics of deploying the technology;The applications that are feasible;The skills & abilities available in-house or external sources to develop the applications;The skills & abilities within the organization to use the applications;The pressures on the particular organizat

5、ion or its industry to improve performance.IS and ITIT/ICT refers specifically to technology, essentially hardware, software and telecommunications networks.Tangible (e.g. servers, PCs, routers, cables), andIntangible (e.g. software)IT/ICT facilitates the acquisition, processing, storing, delivery a

6、nd sharing of information & other digital content.IS the means by which people & organizations, utilizing technology, gather, process, store, use & disseminate information (UK Academy of ISs)Some IS are totally automated by IT. IS IT ApplicationApplication refers to the use of IT to address a busine

7、ss activity or process.Two types of applications:-General uses of IT HW & SW to carry out particular tasks such as word processing, electronic mail or preparing presentation materials.Use of technology to perform specific business activities or processes such as general accounting, production schedu

8、ling or order processing.Pre-packaged, pre-written SW programs or be developed in-house or outsourced. e.g. ERP packagesIn order to create a system that effectively supports users, it is first necessary to conceptualize that which is to be supported (the IS), since the way it is described will dicta

9、te what would be necessary to serve or support it (the IT).More termsE-commerce refers to the conduct of commerce or business electronically essentially using Internet technologies.M-commerce refers to the use of mobile devices for the conduct of business transactions while t-commerce refers to a si

10、milar use of television.E-business refers to the automation of an organizations internal business processes using Internet and browser technologies.This is how Internet should be viewed:Internet is an enabling technology a powerful set of tools that can be used, wisely or unwisely, in almost any ind

11、ustry and as part of almost any strategy; not the business strategy.Pervasive, interactive, a new medium the market space.Why Organizations Fail to Realize Benefits from Investments in IT?Investments made only in technology;Not understanding or analyzing the nature of activities that the technology

12、is to support strategically or operationally in the organization;Early Views and Models of IS/IT in OrganizationEarly 1950s: use of computers in businessMid to late 1960s: computers usage became more significant with the development of multi-purpose mainframe computers Batch processing of tasks and

13、activities in organizations became possible throughIncrease in processing speedCheaper memoryUseful of magnetic disc and tape storageBetter programming languageContinue1970s: Minicomputers used for a variety of business applications But IS/IT still viewed as a centralized, integrated concept derived

14、 from mainframe Gibson and Nolan (1974) modeled evolution of IS/IT in an organization, based on Anthonys (1965) hierarchical application portfolio model.Application Portfolio ModelDescribed by R. N. Anthony (1965)Structure of information system in an organization is based on a stratification of mana

15、gement activity into different levels:Strategic planningManagement controlOperational controlTypical Planning, Control and Operational SystemsNolan And Gibsons 6-stage Model For Evolution of IS/ITConsidered 6 aspects of IS/IT managementThe rate of IS/IT expenditure;The technological configuration;Th

16、e applications portfolio;The Data Processing (DP) or IT organization;DP/IT planning and control approaches;User-awareness characteristics.Stages of EvolutionComputer (DP) ManagementInitiationContagionControlInformation Systems ManagementIntegrationData managementMaturityTransition from DP to MISChan

17、ge in how IS/IT resources were managedChange in how the role of IS/IT is evaluatedStrategy for management of IS/ITNolans Stages of Growth ModelInitiationContagionControlIntegrationData ManagementMaturityA formative influence on much information systems planning was Nolans stages of growth model (Nol

18、an, 1979) in which businesses were described as being within one of six stages of data processing growth as follows: Nolans Stages of Growth ModelInitiationComputer-based IT had recently been introduced, often in the accounting and finance areas; initial applications were replacement of rule-based l

19、abor-intensive computational activities such as payroll, accounts and ledger; analysis and design activities were not formalized and were left to the initiative of a programming unit; project planning and scheduling were undeveloped.ContagionUsers became aware of possibilities, and began agitating f

20、or applications, which proliferated in an uncoordinated manner; the data processing departments profile increased, it maintained control of the apparently arcane procedures necessary for implementing software, but its promise of new systems exceeded its capacity to produce them.ControlBudget overrun

21、s, implementation failures, and senior management disenchantment, led to stronger financial control, project planning, and a greater attempt to meld management of IT with understanding of business processes, resulting in introduction of management information systems terminologyIntegrationTechnologi

22、cal progress produced database driven solutions for business processes, which could now be brought together from their disparate and often uncoordinated applications; management information systems were becoming more generic information systems, and decentralized; end user computing began its develo

23、pment and facilities such as information centers were formed for user support.Data administrationRecognition of the information resource becomes widespread; the orientation of systems becomes one of data use; information management becomes a means of assuring data quality through information reposit

24、ories, and user responsibility and ownership of information.MaturityThe information resources are managed with the strategic planning framework of the enterprise, and there is representation on the senior management group, perhaps under a designated chief officer.View from a More Distant Perspective

25、The six stages of the model divide into 2 larger eras, separated by a transition point between stages 3 and 4Transition from computer (DP) management to information (systems) managementMajor changes occur in who managed what for whom, and howTransition between Computer and Information ManagementRati

26、onale of the TransitionDeliveryReorientationReorganizationRationale of the Transition: DeliveryImproving the ability to deliver and support the systems and technology.Achieving top management credibility as a valuable function is a prime objective.Improving delivery performance, not necessarily prov

27、iding users with what they really need.Rationale of the Transition: Reorientation Establishing good relationships with the main business functions, supporting business demands through the provision of a variety of services as computing capability spreads through business.Extended outside the DP depa

28、rtment to provide a valued service to all business function management. Different areas will benefit differently without regard to business importance.Rationale of the Transition: ReorganizationThe high level of awareness created both locally in the business area and centrally in senior management c

29、reates the need for a reorganization of responsibilities designed to achieve integration of the IS investment with business strategy and across business functions.Becomes the best way of satisfying each of the differing business needs through a coalition of responsibilities for managing information

30、and systems.2 Eras from 1960 to early 1980DP eraMIS eraDifferences b/w DP and MISDP Lessonsneed to understand the process of developing complete information systems, not just the programs to process data.more thorough requirements and data analysis to improve systems linkages and a more engineered a

31、pproach to designing systems componentsmore appropriate justification of investments by assessing the economics of efficiency gains and converting these to return on investmentless creative, more structured approaches to programming, testing and documentation to reduce the problems of future amendme

32、nts, more discipline was introduced with “change control procedures” and sign off on specifications and testsDP Lessonsextended project management which recognized the need for coordination of both user and DP functions and the particular need to establish user management in a decisive role in the s

33、ystems development the user had to live with the consequences the need for planning the interrelated set of systems required by the organizations, better planning produced overall improvements in systems relevance and productivityMIS Lessonsjustification of IS investments is not entirely a matter of

34、 return on investment / financial analysisdatabases require large restructuring projects and heavy user involvement in data definition data integration had been weak based on the project by project DP approachMIS Lessonsthe IS resource needs to move from a production to a service orientation to enab

35、le users to obtain their own information from the data resource the information centre conceptneed for organizational policies, not just DP methodologiespersonal computers and office systems enable better MIS to be developed, provided that users and IS people both focus on the information needs rath

36、er than the technologyThree Era ModelObjectives of the three eras: -Data Processing (DP) EraTo improve operational efficiency by automating information-based processesManagement Information Systems (MIS) EraTo increase management effectiveness by satisfying their information requirements for decisio

37、n makingStrategic Information Systems (SIS) EraTo improve competitiveness by changing the nature or conduct of business IS/IT as a source of competitive advantageTrend in the Evolution of Business IS/ITMain Types of Strategic SystemShare information via technology-based systems with customers/consum

38、ers and/or suppliers and change the nature of the relationshipLinking to Customers and SuppliersProduce more effective integration of the use of information in the organizations value-adding processesImproved Integration of Internal ProcessesEnable the organization to develop, produce, market and de

39、liver new or enhanced products or services based on informationInformation-based Products and ServicesProvide executive management with information to support the development and implementation of strategy.Executive Information SystemsOther Classification: Notowidigdo, 1984Internal systems that have

40、 direct benefit for the companyExternal systems that have direct benefit for the companys customersVenkatraman, 1991: 3 Types of Revolutionary Use of ITBusiness process redesignUsing IS/IT to realign business activities and their relationships to achieve performance breakthroughs.Business network re

41、designChanging the way information is used by the organization and its trading partners, thereby changing how the industry overall carries out the value-adding processesBusiness scope redefinitionExtending the market or product set based on information or changing the role of the organization in the

42、 industry.The Different View of SISSuccess Factors in SISExternal, not internal, focusLooking at customers, competitors, suppliers, other industriesAdding value, not cost reductionDoing it better not cheaperSharing the benefitsBuy in, commitment to success, a switching costUnderstanding customerWhat

43、 they do with the productHow they obtain value from itWhat problems they may encounterSuccess Factors in SISBusiness-driven innovation, not technology-drivenThe new or existing technology provides or enables a business opportunity or idea to be converted into realityMajor failures in using IT are of

44、ten based on much better technology and bad business vision.Incremental developmentDoing one thing and building on and extending the success by a further developmentSuccess Factors in SISUsing the information gained from the systems to develop the businessProduct and market analyses plus external ma

45、rket research information can be merged and then recut in any number of ways to identifying more appropriate marketing segmentation and product mix.The Relationship b/w the Business, SIS, MIS and DPThe Management ImplicationsWe must manage IS/IT and its various applications in accord with the type o

46、f contribution it is making- improving efficiency, effectiveness and/or competitiveness through business changeWe should treat IS/IT like other part of the business = develop strategies for information systems and technology that are derived from and integrated with other components of the strategy

47、of the business.The Relationship b/w Business, IS and IT StrategiesIS Application Portfolio High PotentialStrategicKey OperationalSupportApplications which are critical to sustaining future business strategyApplications on which the organisation currently depends for successApplications which may be

48、 of important in achieving future successApplications which are valuable but not critical for successDeveloped from Ward Fig., 1.8 which is sourced from McFarlanIS Application PortfolioEvolutionary StagesTurnaroundStrategicKey OperationalSupportStage 5Stage 3Stage 2Stage 1Stage 4?Source: Ward et al

49、page 39What is an IS/IT StrategyIS/IT strategy is composed 2 parts: an IS component and an IT componentThe IS strategy defines the organizations requirement or demand for information and systems to support the overall strategy of the business.IT strategy is concerned with outlining the vision of how

50、 the organizations demand for information and systems will be supported by technology.It addresses the provision of IT capabilities and resources and servicesThe Strategic Alignment Model: Henderson and Venkateaman, 1993 Business StrategyOrganizational Infrastructure and ProcessesIT StrategyIS Infra

51、structure and ProcessesIncreasing Organizational Maturity with Respect to IS planning : Earl, 1993Stage 1Stage 2Stage 3Stage 4Stage 5Main taskIS/IT application mappingDefining business needsDetailed IS planningStrategic/ competitive advantageLinkage to business strategyKey objectiveManagement Unders

52、tandingAgreeing prioritiesBalancing the portfolioPursuing opportunitiesIntegrating IS and business strategiesDirection fromIT ledSenior management initiativeUser and IT togetherExecutive/senior management and usersCoalition of users/management and ITMain approachBottom-up developmentTop-Down analysi

53、sBalanced top-down and bottom-upEntrepreneurial (user innovation)Multiple method at same timeSummary description“Technology led”“Method driven”“Administrative”“Business led”“Organization led”Strategic Alignment Maturity (SAM):Luftman, 2000Strategic Alignment Maturity (SAM):Luftman, 20006 IT-business

54、 alignment criteria:Communication Maturity: Ensuring ongoing knowledge sharing across organizationCompetency/Value Measurement Maturity: Demonstrating the value of IT in terms of contribution to the businessGovernance Maturity: Ensuring that the appropriate business and IT participants formally disc

55、uss and reviewStrategic Alignment Maturity (SAM):Luftman, 2000Partnership Maturity: How each organization perceives the contribution of the other; the trust that develops among the participants and the sharing of risks and rewardsScope and Architecture Maturity: the extent to which IT is able to:Go

56、beyond the back office and into the front office of the organizationAssume a role supporting a flexible infrastructure that is transparent to all business partners and customersEvaluate and apply emerging technologies effectivelyEnable or drive business processes and strategies as a true standardPro

57、vide solutions customizable to customer needsStrategic Alignment Maturity (SAM):Luftman, 2000Skills Maturity: Going beyond the traditional considerations such ad training, salary, performance feedback, and career opportunities are factors that enhance the organizations culture and social environment

58、 as a component of organization effectiveness.Strategic Alignment Maturity CriteriaStrategic Alignment Maturity (SAM):Luftman, 2000Initial/Ad Hoc Process: Business IT not aligned or harmonizedCommunications: business/IT lack understandingCompetency/value: some technical measurementsGovernance: no fo

59、rmal process, cost center, reactive prioritiesPartnership: conflict; IT a cost doing businessScope and architecture: traditional (e.g., accounting, e-mail)Skills: IT takes risk, little reward; technical trainingStrategic Alignment Maturity (SAM):Luftman, 2000Committed Process: The organization has c

60、ommitted to becoming alignedCommunications: limited business/IT understandingCompetency/value: functional cost efficiencyGovernance: tactical at functional level, occasional responsivePartnership: IT emerging as an asset; process enablerScope and architecture: transaction (e.g., ESS, DSS)Skills: dif