Discussion Reply for 6 posts

A/ According to Eisenhardt (1989), agency theory is “relationships that mirror the basic agency structure of a principal and an agent who are engaged in cooperative behavior, but have differing goals and differing attitude toward risk. Agency theory was assessed in two different positions; some scholars argued that agency theory contributes to organizational theory (Ross, 1973) while others argued that the agency theory does not resolve any problems and it is too narrowed. The argument also indicated that the theory does not provide testable implications; it hardly describes the actual events. Overall, agency theory focus is to solve two problems that can arise in agency relationships. The first problem occurs when the desires or goals of the principal and agent conflict. The second problem happens to be the “risk sharing” and that is when the principal and the agent have different views toward risk (Moldoveanu and Martin, 2001). The main purpose of the research was to illustrate how organizations can use agency theory to resolve principal-agent issues surrounding their organizations.

Eisenhardt, K. M. (1989, January). Agency Theory: An Assessment and Review. The Academy of Management Review, 

B/ The articles discussion of sustainability, virtualization, and the role of the CIO are tied into our previous weeks of discussion. The same topics have been prevalent throughout every discussion. They all tie into the role and responsibilities of the CIO in an enterprise system, going towards the future of IT. Both articles presented very clear discussions of the subject matters presented. The discussion of agency theories is important in understanding the role of the CIO. The agency theory is useful in addition to the organizational theory. There are differences and similarities between the two, which make it prevalent. The concept of risk sharing is a problem that arises when different parties have different attitudes to risk are uncovered. Different goals and the division of labor are key aspects of the risk factors involved in agency and organizational theories ( Eisenhardt, 1989). The relationship contract occurs when there is an idea that one person performs, while the other delegates. This is an area where a great deal of the conflict arise. The goals conflict between individuals, especially when there is a difference of attitude on risk sharing. The understanding and conflict arise between the relationship between the principal and the agent. This is similar to what we have discussed between the relationship between the CIO and business executives. This relationship has to be understood and they must work together to achieve the goals and values of the firm for the success of the firm. According to the article, the principal knows what the agent is doing and sometimes does not. This is where the discrepancy lies and can cause issues within the system *Eisenhardt, 1989). A successful organization is where the principal learns about the agent and the agent learns about the principal. This statement holds true with the relationship between the CIO and business leaders. There has to be an understanding and appreciation of the roles and responsibilities of each other for the success of the company. As we have constantly discussed, everyone has to be on the same page in order for IT and business to be successful. IT needs business and business needs IT. They work hand in hand together. In the agency theory the concept is self interest. The goals can sometimes conflict with other organizational levels, but they are resolved through and with  the alignment of incentives (Eisenhardt, 1989). Agency and organizational theories have similarities, but the independent variables are what create the distinct differences. Agency theories can be powerful, but narrow. Regardless the theory has realistic and testable perspectives that create a better understanding of the principal and agent relationship. 

Strategic IT systems have valuable operational diversities that allow productivity long term. Sustainability creates cost reduction and efficiencies that are a necessity to IT advancement. Sustainability enables the consolidation of business practices and the renewal of resources (Hujsak, 2011). Sustainability helps to manage and preserve resources and creates an equilibrium in nature. The IT role in globalization is to achieve sustainability. The CIO role is important in the global enterprise and survival of IT. IT renews the global network through connectivity with sophisticated information, trading, and financial systems (Hujsak, 2011). The future of the CIO role with sustainability and IT global advancement may over shadow the high executive role, due to the general responsibilities associated with the enterprise system. As globalization increases the transformation of IT also increases due to the capabilities of the system. The BPO system enables the off-sourcing of manufacturing and business practices (Hujsak, 2011). Shifting IT to global opportunities will foster agility, an environment of learning, flexibility, low costs, and access to a growing talent pool. 

The CIO has to understand the sustainability process to be effective. The have to be able to use their skills and talents to operate the enterprise system with strategic planning and effectively communicate the results with partners. According to Hujsak, there are metrics with sustainability: Carbon Footprint and Ecological Footprint (Hujsak, 2001). These metrics allow for the valuation of energy sources and analyze the effect of resource consumption. The article discussed several examples of companies that successfully practices and utilized sustainability. I particularly liked reading about NIke. Nike is a global leader in sports apparel and branding. They uses TNS principles to reduce solvent use  by 95% with water based cements, cleaners, and materials. This lead to savings of 4000 tons per year and $1.6 million in cost savings (Hujsak, 2011). IT  growth has a definite impact on sustainability. 

Virtualization goes hand in hand with data center consideration. Enterprise sustainability is increased, asset utilization is increased, energy consumption is decreased, and the ecological footprint is decreased with the use of virtualization.  The CIO is the driver of the transformation process of globalization. They have to understand and implement virtual agility and sustainability. Virtualization considers cost, performance, reliability, maintainability, scalability, availability, workload characteristics, security, and global mobility (Hujsak, 2011). 

Virtualization also enables service oriented architectures through the rapid development of resources in the most remote areas of the world (i.e., globalization). This enables the successful process of businesses being able to interact with subsidiaries, vendors, and competition, while still being centrally located in another area. This cuts down on the cost of overhead with physical infrastructures. Global enterprise systems with the use of virtualization enable generation Y to have the flexibility to share and learn from the masses due to IT enhancements (e.g., teleconferences) (Hujsak, 2011). Terrorism is a concern in global IT because individuals and organization s attempt to control systems with the advancements in global IT. These issues can be combated with effective communication, security safeguards, and program upgrades. Strategic planning enables global organizations to optimize resource efficiencies through customer management, increased efficiencies, and IT agility. Hence, with the advancements in global IT, it does not matter if the processing engine data is in Bangladesh or Nairobi. The IT professional has to ensure hat the information is disseminated in the proper format that the individuals in that country understand. It doesn't matter what flag the vendor's employees salute or what god they worship due to the advancements and capabilities in global IT and virtualization. The key is ensuring that the business values and goals are understood and embraced by the global organization. Profitability lies in an organization's success to be flexible in a global expanding market, while still being cognizant of another cultures values.  For example, McDonald's is an international company. Whether you are in America, China, or India, McDonald's is structured the same and known as McDonald's no matter the location. However, McDonald's has to be cognizant of what specific products to sell in different countries. Hence in America the specialty is Beef and Chicken, however in Muslim territories the menu is based upon certain food and religious beliefs, but it is still McDonald's The CIO and business leaders must ensure that once the global network and infrastructure are stable that the focus is IT advancement and ROI. 

References

Eisenhardt, K. (1989). Agency Theory: An Assessment and Review: Academy of Management Review. 14(1), 57-74.

Jujsak, J. (2011). Sutainability, Technology, and Economic Pragmatism: A View into the Future. In Stenzel, J. (Ed.). CIO Best Practices: Enabling Strategic Value with Information Technology(pp.177-236). Hoboken, NJ: John Wiley & Sons, Inc. 

C/ This weeks discussion is about agency theory and sustainability. Agency theory is the relationship between the principal and the agent. The principal and the agent could have different goals, interests, objectives and risks therefore causing a conflict of interest between the agent and the principal. When the agent and principal have different interests, and risks this causes a conflict in the relationship. The relationship between the principal and the agent should have efficient organization of information and risk costs. The agent and principal could have different self interests which contributes to the conflict in the relationship (Eisenhardt, 1989).

    The agency theory has developed into two streams. The positivist agency theory and principal agency theory.  Both theories have similarities but they differ as well. The positivist theory focuses on the conflicting goals between the principal and agent and the mechanism to control or monitor the relationship. The principal agency theory focuses on the relationship between principal and agent and can be applied to employer - employee , lawyer- client (Eisenhardt, 1989).

  Per Hujsak sustainability is defined as "the ability to sustain something" (Hujsak, 2011). The CIO must take an active role in the sustainability of Information technology and he or she must understand how sustainability aligns with the strategic planning. Information technology sustainability has future opportunities and will improve and enhance the enterprise. Data centers consolidation virtualization and cloud computing all play a role in sustainability. Virtualization reduces energy costs and the CIO becomes more involved with service oversight and vendor management rather than managing the IT staff. Companies will begin to utilize services and CIO's will be more focused on managing services rather than people (Hujsak, 2011). 

 Cloud computing and virtualization are on the rise and companies are moving towards more cloud computing and virtualizing. These methods reduce energy consumption but also provide businesses the opportunity to lease or rent services rather than stand them up internally. Businesses no longer need to invest large capital into IT as they can now rent or lease this as a service. Cloud computing and virtualization is a sustainable strategy and the CIO needs to plan for this. These methodologies change the way businesses function (Hujsak, 2011). 

    Reference:

Eisenhardt, K. 1989. Agency Theory: An Assessment and Review. Academy of  Management Review. 14(1), 57-74.

Hujsak, J. (2011.) Sustainability, Technology, and Economic Pragmatism: A View into the Future.  In Stenzel, J. (Ed.)  CIO Best Practices: Enabling Strategic Value with Information Technology (pp. 177-236).Hoboken,  NJ: John Wiley & Sons, Inc.

Thank you,

D/ Virtualization in the realm of IT is simply creating an imitation of something like an operating system or a device for storage, etc. In today's world, virtualization of some or even all of a firms computing infrastructure is mainly to cut down on the cost of production and maximize profits. Some of the most interesting new developments in the global enterprise have to do with different forms of virtual presence. "Simple conference calls and Video Teleconferencing (VTC) sessions are rapidly giving way to more immersive telepresence systems" (Hujsak, 2011). Man is to error so they say. Machines are precise, concise, and only miss if programmed otherwise. Efficiency is the thing in corporate world so a machine that works 24 hours a day can replace a human power that needs to rest. To this extent, virtualization of humans and human power will come to the CIO's aid where he/she can get a machine like a robot that does what a human does and multi-task at the same time. "Computer Integrated Manufacturing (CIM) operations integrate robotics into completely automated production operations, tying together design, planning, purchasing, inventory control, and manufacturing" (Hujsak, 2011). Robots extends the idea of virtualization by capturing skills into primitive, autonomous machine intelligence, which can be deployed in large scale throughout production line operations, as is now with robotic assembly systems in automobile plants, largely eliminating human workers. 

Hujsak, J. (2011.) Sustainability, Technology, and Economic Pragmatism: A View into the Future.  In Stenzel, J. (Ed.)  CIO Best Practices: Enabling Strategic Value with Information Technology (pp. 177-236).Hoboken,  NJ: John Wiley & Sons, Inc.

E/ Hujsak introduces us to the concept of sustainability as it pertains to the CIO. He believes that the CIO must “understand, embrace, and employ the principles” (Hujsak, 2011) of sustainability. He continues the conversation from last week by discussing sustainability concepts such as power management carbon footprint, virtualization, and cloud-based computing. He takes virtualization a step further and includes storage virtualization and network virtualization.

Will virtualization eliminate dedicated IT positions? The answer is not necessarily, although Husjak says “No local IT support personnel are needed” (Husjak, 2011). In the case of virtualization, experienced IT staff in virtualization creation, configuration, and constant system monitoring will always be needed. (sales pitch - VMware makes a great product). The IT staff members can be reallocated to other areas of the IT team if possible. In the cast of cloud computing, bare bones IT staff will be needed.

Since the CIO will no longer have a full, dedicated staff, he will become more focused on dealing with the vendors and delivering quality service to the desktops. The vendors will need to be monitored on a regular basis, and during contract renegotiation, service issues and expectations should be addressed. He will also need to make sure that the services are available to the user desktops, and if not, he may need to deal with an internal networking staff member or hire a service vendor.

As organizations move towards globalization and decentralization, and have more of a web presence, the CIO will start to have other concerns. It should not matter where the data center is, the CIO needs to be concerned that the service is available 24/7/365. If the data center is located in the US, the CIO will need to understand that there may be as much as a 3-hour time difference should he need to contact the data center/provider. If the provider is overseas, concerns that could arise are possible language barriers, many time zones, cultural issues, and social issues. Language barriers can lead to confusion and misunderstanding. When it is 3:30pm on Wednesday afternoon in Honolulu, Hawaii, it is 2:30pm Thursday afternoon in Auckland, New Zealand. Cultural differences may include the way employees dress, religion, belief system, and different holidays than we celebrate. We need to remember to respect each other’s differences. Diversity training or cultural training should be offered by each organization.

According to Eisenhardt, agency theory suggests that the organization can be viewed as contracts between resource holders. An agency relationship arises whenever one or more individuals, called principals, hire one or more other individuals, called agents, to perform some service and then delegate decision-making authority to the agents. One of the concerns is what happens when the goals of the principal and agent are not aligned? She asks whether “a behavior-oriented contract is more efficient than an outcome-oriented contract?” (Eisenhardt, 1989, p. 58).

The two types of agency theory are “positivist and principal-agent” (Eisenhardt, 1989, p. 59). Positivist focuses on those areas where a conflict in goals between principal and agent could arise, and the governing rules of the agent. Principal-agent focuses on the “contract, behavior versus outcome, between the principal and the agent” (Eisenhardt, 1989, p. 60).  Managers (agents) and shareholders (principals) have divergent interests, so the principals must monitor the agents or incentivize agents to act in the interests of principals.

Some principals may have sustainability interests (e.g., concern for the environment) that run counter to managerial interests. Other principals may have only short-term interests, so managers must be aware of the potential for principal opportunism as well.

References

Eisenhardt, K. M. (1989, January). Agency Theory: An Assessment and Review. The Academy of Management Review, 14(1), 57-74.

Hujsak, J. (2011). Sustainability, Technology, and Economic Pragmatism: A View into the Future. In J. Stenzel, CIO Best Practices: Enabling Strategic Value with Information Technology (Second ed., pp. 177-236). Hoboken, NJ, USA: John Wiley & Sons, Inc

F/ Over the course of a decade, sustainability and virtualization have morphed from a fringe and feel good idea embraced by a handful of companies into a mainstream business concept. In recent years, companies particularly Global 2000 firms have appointed chief sustainability officers (CSOs) and others to oversee a spate of initiatives ranging from corporate sourcing, packaging, and greenhouse gas emissions to waste, recycling, and working conditions in overseas factories.

The two articles presented very well in the discussions of the subject matters presented. The discussion of agency theories is important in understanding the role of the CIO. The agency theory is useful in addition to the organizational theory. There are differences and similarities between the two, which make it prevalent. The concept of risk sharing is a problem that arises when different parties have different attitudes to risk the uncovered. Different goals and the division of labor are key aspects of the risk factors involved in agency and organizational theories ( Eisenhardt, 1989). The relationship contract occurs when there is an idea that one person performs, while the other delegates. This is an area where a great deal of the conflict arises. The goals conflict between individuals, especially when there is a difference of attitude on risk sharing. The understanding and conflict arise between the relationship between the principal and the agent. This is similar to what we have discussed between the relationship between the CIO and business executives. This relationship has to be understood and they must work together to achieve the goals and values of the firm for the success of the firm. According to the article, the principal knows what the agent is doing and sometimes does not. This is where the discrepancy lies and can cause issues within the system *Eisenhardt, 1989). A successful organization is where the principal learns about the agent and the agent learns about the principal. This statement holds true with the relationship between the CIO and business leaders.

"There has been a fairly significant change in terms of what organizations and chief sustainability officers are focused on," ( Eisenhardt, 1989), a director at Deloitte Consulting, who notes that the role of the CSO has evolved far beyond compliance and basic green issues. "The CSO is increasingly involved in business operations, business decision-making, the introduction of new products and services, and global environmental and social issues," ( Eisenhardt, 1989). In fact, the CSO's reach now touches virtually every corporate function, including operations, research and development, marketing, financial, legal, and human resources.

This changing landscape directly impacts CIOs and enterprise IT. Organizations require increasingly sophisticated monitoring, tracking, analytics and reporting tools to manage sustainability initiatives effectively. "In order to achieve significant results," ( Eisenhardt, 1989), "sustainability must be baked into a business strategy, particularly as companies evolve from a focus on framing environmental and social issues in a compliance-centric way and adopt broader thinking and policies that center on driving sales, managing risk, engaging customers and shareholders, and reducing operating costs."

A decade ago, the typical CIO was concerned mostly with IT infrastructure. Today's CIO faces a bevy of additional challenges, namely user desires for mobility and the cloud. There's an upside, though: Helping users get what they need makes CIOs more visible to the rest of the business. Therefore a careful review into how the vendors and vendee relationship is set up needs to be taken. Vendors cannot be treated the same way as staff, which is where agency theory comes in. Vendors, or agencies, do not have the same interests as the companies they provide service for. They need to reexamine the role of the agency as it relates to the business, and potentially redefine the way in which they are contracted. Should a contract be based on the behavior of the vendor staff or the results of the product? There are many levels of complexity in the relationship study involved in agency theory. Some of these include contracts, information, information systems, risk aversion, outcome uncertainty, goal conflicts, and the length of the relationship. There are different schools of thought as to how each of these subjects can be better off or worse off by addressing them with outcome-based contracts or behavior-based contracts. The role of the employee changes so drastically when introducing the agency idea to the business workplace, as the idea of the traditional employee fades away in oblivion as these agencies take over certain aspects of the work (Eisenhardt, 2011).

Strategic IT systems are information systems that are developed in response to corporate business initiative. They are intended to give competitive advantage to the organization. They may deliver a product or service that is at a lower cost, that is differentiated, that focuses on a particular market segment, or is innovative. Sustainability enables the consolidation of business practices and the renewal of resources (Hujsak, 2011). Sustainability helps to manage and preserve resources and creates an equilibrium in nature. The IT role in globalization is to achieve sustainability. The CIO role is important in the global enterprise and survival of IT. IT renews the global network through connectivity with sophisticated information, trading, and financial systems (Hujsak, 2011). The future of the CIO role with sustainability and IT global advancement may over shadow the high executive role, due to the general responsibilities associated with the enterprise system.

Brick and mortar (also bricks and mortar or B&M) refers to a physical presence of an organization or business in a building or other structure. The term brick-and-mortar business is often used to refer to a company that possesses or leases retail stores, factory production facilities, or warehouses for its operations. More specifically, in the jargon of e-commerce businesses in the 2000s, brick-and-mortar businesses are companies that have a physical presence and offer face-to-face customer experiences.

This term is usually used to contrast with a transitory business or an Internet-only presence, such as fully online shops, which have no physical presence for shoppers to visit, talk with staff in person, touch and handle products and buy from the firm in person. However, such online businesses normally have non-public physical facilities from which they either run business operations and or warehouses for storing and distributing products

Reference

Hujsak, J. (2011). Sutainability, Technology, and Economic Pragmatism: A View into the Future. In Stenzel, J. (Ed.). CIO Best Practices: Enabling Strategic Value with Information Technology(pp.177-236). Hoboken, NJ: John Wiley & Sons, Inc.

Eisenhardt, K. (1989). Agency Theory: An Assessment and Review: Academy of Management Review. 14(1), 57-74.