Information Technology Portfolio

Session 2

Overview
Investments in Information Technology can have many different objectives
Cost reduction
Business Integration Catering to senior management real time informational needs

Overview
IT portfolio comprises of all IT services whether
Centralized Decentralized Distributed or Outsourced

Overview
IT investments are portfolios just like financial investments Managers make decisions on the basis of
Capabilities required now and in near future Role of technology in the industry Level of investment

Overview
Concepts fundamental to managing Information technology are those of business and not of technology.
The objective of IT investments is to provide business value in two related ways
To successfully implement current strategies To enable new strategies.

Investments in Information Technology

Investments in Information Technology

The infrastructure capability includes everything from communication to computing facilities to data sharing.
Firm wide network services, provision and management of large scale computing, the management of shared customer databases, firm wide intranet capability.

Transactional Technology Objective

Automates the basic repetitive transactions of the firm. Objective is to cut costs by substituting capital by labor.
Built on reliable infrastructure

Informational Technology Objective

Provides the information for managing and controlling the firm. Systems include management control, decision making, planning, communication and accounting, EIS

Strategic Technology Objectives

Immediate loan approvals
e-Facilities to consumers Citibank pioneered ATM in New York and changed the banking scenario Slowly strategic changes became transactional in nature.

Strategic Technology Objectives

Shared ATMs, shared infrastructure .
Some ATM holders became service providers

Multiple Objectives
Canadian company Sun Life pioneered the services of drugstores to directly submit claims electronically to insurers.
This reduces
The time taken to submit and process claims Volumes of paper involved.

Multiple Objectives
Strategic Objective
To increase sales with satisfied clients.

Transactional objective
Reducing the cost of processing claims

Shared infrastructure and informational

Communications systems Monitoring of customer information.

Aligning Business Strategy with Information Technology

Aligning Business Strategy with Information Technology

The strategic context of the firm drives information technology strategy. This in turn strives to achieve better alignment of the Information Technology portfolio
The environment impacts the strategic context in two ways

Aligning Business Strategy with Information Technology

Information technology portfolio impacts the strategic context in two ways
Provides information about the current health of the organization Can enable new current strategies to emerge.

Aligning Business Strategy with Information Technology

Strategic context
Strategic Intent
Drives long term investments in the infrastructure Strategic Intent and IT infrastructure are stable over time

Current strategy
Will drive other parts of the portfolio and will change as the customer requirements change.

Aligning Business Strategy with Information Technology

IT strategy decides the way information services are delivered
Outsourced Insourced Centralized Decentralized

Barriers in alignment
Expression Barriers
Lack of direction in business strategy Changing strategic intents Insufficient awareness of IT

Specification Barrier
Lack of IT involvement Two independent monologues

Implementation Barrier

References
Peter Weill and Marianne Broadbent ,Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology., Harvard Business School, 1998.