Term/Case study
Chapter 10
An Organizing Framework for the Strategic Management of IS/IT
Outline
The Strategic Management Requirement
Positioning and Managing IS/IT in an Organization
From a Functional View of IS/IT to an Organization-wide Perspective – Capability and Competences
IS/IT Governance and Why It is Important
What Decisions Need to be Governed?
Creating the Organizing Framework for IS/IT Decision Making
Instruments of Governance
Failure of Governance
Three Effects resulting from lack of governance
The applications acquired, developed and implemented do not meet overall business needs and priorities
Resources are misused, even wasted, or their use is sub-optimal
Strategy formulation is essentially a retrofitting process, producing enormous rework.
Three main reasons:
Lack of alignment between the business and IS/IT strategies
Uncoordinated management of IS demand and IT supply
Over-centralization or decentralization of responsibilities for IS/IT with lack of mechanisms to ensure coherence across centralized and devolved IS/IT decisions and activities
Positioning and Managing IS/IT in an Organization
Three key relationships
With outside IT supplier
With the business managers and application and service users
With IT specialists in other companies
Requires five key competences
IT leadership, which includes IT envisioning, fusing IT strategy with business strategy, and managing IT resources
Architecture development, which is concerned with developing a blueprint for the overall IT application and technical design
Business enhancement, which includes business process analysis and design, project management and managing relationships with users
Technology advancement, including application design and development
Supplier management, which includes managing and developing relationships with vendors and suppliers, negotiating and monitoring contracts and purchasing
From a Functional View of IS/IT to an Organization-wide Perspective
Six macro-level competences
Strategy:
Ability to identify and evaluate the implications of IT-based opportunities as an integral part of business strategy formulation
Define the role of IS/IT in the organization and its products and services
Define the IS contribution:
Ability to translate the business strategy into processes, information and application investments
Change plans that match the business priorities (i.e. the IT strategy)
Define the IT capability
Ability to translate the business strategy into long-term information architectures, technology infrastructure and resourcing plans that enable the implementation of the strategy (i.e. the IT strategy)
Use:
Ability to maximize the benefits realized from the implementation of IS/IT investments through effective exploration and exploitation of information, applications, technology and services
Deliver solutions:
Ability to deploy resources to devise, provision, implement and operate IS/IT business solutions that exploit the capabilities of the technology
Supply:
Ability to create and maintain an appropriate and adaptable information, technology and application supply chain and resource capacity
Eight areas of ‘incompetence’
50% (80% in the top three) or more respondents deemed them inadequate or problematic– are:
Business strategy
Benefits delivery
Managing change
IS/IT governance
Benefits planning
Business performance improvement
Information asset management
Prioritization
NOTE: All the competences in the framework under the macro heading ‘Use’ (the top three in the list!) were deemed to be inadequate
The IS Capability, Competences and Resources
Three levels of the model
Resource level
Knowledge and know-how that are the key ingredients of the IS/IT competences: the skills, specialist and business knowledge, experience and behavioral attributes and attitudes of both employees and external providers
Organizing level
How the resources are mobilized and orchestrated via structures, processes, routines and roles to create the IS/IT competences
Enterprise level
IS/IT capability actually manifests itself as a strategic resource that delivers value and improved performance for the organization.
From Resources to Competences
Processes
Helpful in understanding many aspects of managing the supply of IT and the delivery of information and systems
Methodologies for application design and development, project and service management (for example) define good practices for some key processes
Less well defined are the processes that derive benefits from the IS/IT investments and applications
Formulating strategies, investment decision making, managing the organizational and business changes required to deliver value, and assigning responsibilities and accountabilities for realizing specific benefits
These activities essentially involve using collective, often tacit, knowledge to address context-specific tasks that cannot be performed according to a prescribed process
Roles (Behaviors)
The range of attributes that distinguish the ability of an individual to perform a particular role are:
Skills – know-how of the job, which implies the ability to produce some action. This might be the ability to program in Java or draw data flow diagrams
Knowledge and experience – know what of the job, the ability to understand what the role demands of the person; for example, knowing what is involved in constructing an IS strategy, managing the investment portfolio or building relationships with vendors
Behaviors, values and attitude – the personal attributes or aptitudes that make knowledge useful and enable skills to be acquired in the first place. Personal characteristics are important and may be crucial in service-oriented roles; for example, IT staff having empathy with users when delivering IS/IT services. Willingness to engage, interact and collaborate with colleagues is also critically important.
Structures
Concerned with the systematic arrangement of people, departments and other subsystems in the organization
Structure of the organization can ultimately affect the performance of processes, particularly those that cross departmental or functional boundaries
Business process re-engineering emerged as a consequence of the problems of functional organization structures and argued for more focus on work processes in designing organizations
From Competences to Capability
Strategy and investment decisions
Determine whether the IS/IT capability is a source of competitive advantage or merely a necessity for competitive parity, or is causing the organization to be at a competitive disadvantage
Organizations may choose to resource the capability (i.e. source and harness the underpinning knowledge and skills) in different ways, but most will rely on a combination of internal and external resources to create the required competences
IS/IT strategy
The critical link between the organization's strategy and IS/IT investment decision making
The organizational characteristic that enables it to conceive, select and implement successful IS/IT strategies
The ‘capability’ is the organization's ability to successfully deploy appropriate IS/IT resources as well as to design, implement and operate new processes and applications and unlock the expected business value
Establishing governance
A way for creating the blueprint for coordinating and integrating knowledge
IS/IT governance is problematic in many organizations
IS/IT use pervades almost every aspect of business activity
Individuals can more easily acquire and use ever more powerful technology and a wide range of applications
IS/IT Governance and Why It is Important
IS/IT governance is concerned with promoting consistent and coherent decision-making behavior across an organization regarding information systems and technology in order to maximize the value the organization derives from IS/IT
Establishing a governance framework for IS/IT entails the allocation of accountabilities and responsibilities, defining processes, setting policies, establishing committees and other cross-organizational forums, determining appropriate metrics, and creating mechanisms to bring business and IT managers and users together in decision-making processes
It also requires the establishment of mechanisms to ensure conformance to decision outcomes and any policies or standards that are developed.
What Decisions Need to be Governed?
YES!!!
Three issues to address:
What are the critical governance decisions, both demand and supply decisions?
How are the decisions to be made – the process, will they be unilateral or shared?
Who makes the decisions – senior management, business managers, IT management, a committee or perhaps external partners (or various combinations)?
The framework should also define any desired decision-making behavior and specify appropriate instruments and processes to be followed
Creating the Organizing Framework for IS/IT Decision Making
Authority
Individual, group or forum that should make the decision and is ultimately answerable for the outcomes of the decision
Process
Enable consistency in decision making and resource allocation
Responsibility
Individuals or bodies responsible for day-to-day execution of the decision
Coordination
Mechanisms (e.g. steering committees, strategy teams etc.) and processes, including the roles to be played by both individuals and groups, for ensuring coherence across all IS/IT decision areas
Monitoring
Approaches to policing decisions, ensuring conformance across the organization to decisions made
Instruments of Governance
Structural Instruments
Horizontal Instruments
Functional Instruments
Instruments for Social Integration
Structural Instruments
Formal organizational structures or roles
Relationship manager
Account executive
Demand manager
And others
Formal organizational roles (e.g. CEO, COO, CIO or line management) have particular accountabilities and responsibilities assigned to them and these can include accountability for aspects of IS/IT
Horizontal Instruments
‘Structural overlays’
Governance groups or councils
Steering committees
Other cross-organizational forums
Non-structural Devices
Formal groupings of individual managers can be a powerful device for encouraging involvement in making decisions and achieving coordination, as well as identifying synergies across decisions
The Role of Steering Groups in IS/IT Strategic Management
Ensure top management involvement in the IS/IT strategy and planning process
Ensure alignment between IS/IT and business strategy
Improve communication with top and middle management
Change user attitudes to IS/IT
Executive Steering group
Interpreting business strategy and agreeing overall IS/IT policies
Establishing priorities, agreeing resource and expense levels, authorizing major investments
Ensuring that strategic applications are identified and achieve their objectives and business benefits
Establishing the appropriate organizational responsibilities and relationships
Ensuring the IS/IT capability is aligned to the needs of the future business strategy
Business Unit (or Functional) IS Strategy groups
Identifying business needs, assessing opportunities and threats and IS implications in that business area and producing and managing the IS strategy for the business area
Prioritizing, planning and coordinating IS activities, budgets and expenditure in the area and ensuring planned benefits are delivered, by carrying out project progress and post-implementation reviews
Ensuring appropriate user resources are allocated to projects and appoint business project/program and application managers
Application Management groups
Sometimes called Program Management group
Identifying and specifying the needs, benefits, business resources and costs of applications and developing business cases to justify the investments
Managing the provisioning, development, implementation and ongoing use of applications and associated IT services to ensure benefits are maximized
Ensuring all business changes necessary to get the benefits are carried out
Ensuring that user resources are made available as needed and used effectively on projects
IT Strategy group
Interpreting IT trends and developments in the context of the organization's business
Ensuring resources are deployed to meet business priorities
Developing IT capabilities, resources and services in line with business IS plans and monitoring the performance of those resources
Planning and managing the supply of technology and specialist bought-in services
Ensuring technical risks are minimized
Producing and managing the IT strategy for the organization
Service Management groups
Translating business needs into technical requirements and resource implications
Selecting the optimum means of meeting the business needs
Monitoring performance against budgets/service levels agreed with the business
Ensuring technical solutions are tested and quality assured to avoid application failure
Planning the development of services and resources to meet evolving demands
Monitoring the performance of external suppliers of applications and services
Technology Management groups
Monitoring and understanding technology developments, formulating options and communicating the implications
Assessing the capabilities and risks of new technologies and IT service providers against known and potential needs
Planning and managing infrastructure developments and migrations to minimize the risk to business applications
Resolving technical problems and contractual issues with suppliers and ensuring service groups are effectively supported
Establishing technology policies and best practices to prevent potential failures and consequent business risks
Structuring or modelling brings together a number of facets of IS/IT strategic management
Top management involvement where it is most useful (i.e. adds most value)
Business and IT balance in determining strategy
Demand and supply management
Strategy, planning and implementation requirements
Exploitation of ideas generated from anywhere
Command and control in effecting policy decisions
An organization-led approach to developing strategies and portfolio management
Consistency over time in developing and implementing strategies
An ability to learn from and transfer experience
Functional Instruments
Outline the degree to which IS/IT decision making follows specified processes, rules and procedures
Instruments for Social Integration
Social integration is primarily about the active participation of key stakeholders in IT decision-making processes,
Working relationships also play a key part (partnerships)
Partnership in context
Partnership will be sustained over time, which depends on the extent to which they see mutual benefits from working together, and have shared goals and assumptions leading to mutual trust.
Partnership in action
Partners influence policies and decisions that affect the operational performance of the partnership and the key factors that create good day-to-day working relationships, such as understanding how others work, shared processes, interdependence of resources, skills and knowledge and personal relationships.
Actions that can help build and sustain these partnerships include:
Education
Joint planning
Measurement and control
Effective use of teams
Multilevel human resource strategy