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The responsibilities of the head of the IS function now go
far beyond operating highly efficient ³production
programming shops.´ These executives must understand
the goals of the enterprise and work in partnership with line
executives to deploy IT to attain the organization¶s goals
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The CIO¶s Responsibilities
± CIO¶s Roles in Three Eras
± Leading
Creating a Vision by Understanding the Business
± Governing
Establishing an IS Governance Structure
± Investing
Shaping the IT Portfolio
± Managing
Establishing Credibility and Fostering Change
Whither CIOs?
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Management of IT has changed drastically in the past 50
years
Early days = manage the technology:
± Get it to work
± Keep it running
± Reduce cost of doing business
Then = manage the information resources
± Support (management) decision making
Delivering information when and where it was needed
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Responsibilities of the head of IS now go far
beyond operating highly efficient µproduction
programming shops¶
These executives are now part of top
management and help form the goals of the
enterprise in partnership with the CEO, CFO
and other members of top management
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The Escalating Benefits of Information Technology
± Kenneth Primozic, Edward Primozic, and Joe
Leben introduce the notion of ³Waves of
Innovation´ which they define as how IT is used by
industries and enterprises.
There are five Waves of Innovation (Figure 2-1):
5. Reaching the consumer
4. Enhancing executive decision making
3. Enhancing products and services
««««««««««««««««««««««««««««««««
2. Leveraging investments
1. Reducing cost
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Escalating Benefits of IT
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Waves 1 & 2 = could be done at µany time¶ (and are still being
done!)
Waves 1 and 2
" SABRE built to reduce costs of making airline
seat reservations
Wave 3
" System expanded so it could be used directly
by travel agents
Wave 4
" System expanded to include hotels and rental
cars through alliances with these suppliers
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Wave 5
American extended their reach to the consumer:
" Introduced EAASY SABRE that enabled consumers direct
access from their PCs
" AAdvantage ± frequent flyer program
" Enhanced their Wave 5 connections to consumers via the Web
(and mobiles?)
" Targeted its most profitable customers = Frequent Flyers
Marketing strategy including µdistressed inventory¶ (the unsold
seats)
Note: this example also illustrates that as the benefits of IT
increase, the importance of executive guidance also increases
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IT has become an essential piece of business strategy
Not keeping up in IT may even mean going out of
business
The job has become too large for one group
While the growing importance of IT is causing the IS
Department¶s work to expand into new areas of
responsibility, management is realizing that the traditional
and more operational portions of the job do not have to be
performed by the IS department
" Particularly µcentralized¶
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The traditional set of responsibilities for IS has
included:
1. Managing operations of data centers, remote
systems, and networks
2. Managing corporate data
3. Performing systems analysis and design, and
constructing new systems
4. Systems planning
5. Identifying opportunities for new systems
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(Another way to look at it:) IS is not a single monolithic
organization, but rather a cluster of four functions (Fig. 2-3):
1. Run operations
2. Develop systems
3. Develop architecture
4. Identify business requirements
The µSqueeze¶ on Traditional IS Activities (Figure 2-4):
" Growing External Services
" Growing Capabilities of Users
µFuture¶ Roles for IS (Figure 2-5):
" Broker
" Systems and Information Architecture
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IS started µcentralised¶ and evolved into a µfederal model¶:
" Some things (standards, operations) = centralised
" Others (application development) = dispersed locally to best meet local
needs
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The Mainframe Era
± Predominated 1960s ± early ¶80s
± Role of DP / IS Manager = operational manager of a
specialist function
Distributed Era
± End of ¶70s as PCs became commonplace
± LANS and WANS linking computers
± Took on 4 more roles:
Organizational Designer
Technology Advisor
Technology Architect
Informed Buyer
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THE µKEY¶
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Main activities = exploration and production
of crude oil and natural gas
The Business is in the Business Units
" 150 business units in 100 countries
ù Each have their own balance sheet and performance
contract
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The term µGovernance¶ has become prominent in all
areas of business including IT.
IT Governance
± ³The assignment of decision rights and the accountability
framework to encourage desirable behavior in the use of IT´
Governance differs from management in that
± Governance is about deciding who makes decisions
whereas
± Management is about making decisions once decision rights
have been assigned
Numerous business scandals (U.S. ± Enron, Global
Crossing etc.; Australia ± HIH) have prompted the
increased interest in this area
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US HQ but operates all over, esp. Latin America ±
manages a diverse portfolio of natural gas and
electric supply, delivery, and trading businesses
± Product and service innovation combined with speed and
flexibility are key drivers
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Complementing IT investments
± IT investments do not reap anticipated
results until accompanying management
practices change to take advantage of
potentially better ways of working
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Introducing a New Methodology
The Prioritization Process
± Winnowing the Wish List
± Selecting Business Objectives
± Prioritizing the Objectives
± Ranking Projects Using the Objectives
± Funding the Projects
The process uses 4 filters:
1. The EVP¶s wish list filter
2. The must-have/should-have filter
3. The UMT prioritization filter, and
4. The business case filter
The result is a list of projects that can be funded
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Benefits Come More From the Discussions Than the
Prioritizations
± When the discussions are structured, focused and well moderated,
the participants better understand the business goals, better
support others and other business units and are more committed
± Leads to:
Healthier teamwork
Better decision processes, and
Better definitions of projects
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Address Project Risks
1. Risk that project will fail
Need mitigation strategies and include cost thereof in the
project cost
2. Risk of not doing the project
E.g. Virus protection
3. Risk that it is the wrong project for what is trying to be
achieved
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People resist change, especially
technological change
May react in several ways:
± Deny, distort or delude
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Rexam case illustrates a number of points
about the CIO¶s current role:
1. CIOs are working outside as much as inside
these days
2. They are working in concert with their peers in
the company in selling and implementing their
visions
3. To stay ahead they need to keep their staffs
experimenting with new technologies
4. Selling the vision occurs one customer, supplier
or executive at a time
" Need to know how µIT ready¶ a customer, supplier,
executive, department or group is
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Some believe the office of the CIO is so broad it should be
handled by a team
Four µpositions¶:
1. Chief Information Officer
± Heads IS and works with top management, customers and suppliers
2. Chief Technology Officer
± Heads IT planning, which involves architecture and exploration of
new technologies
3. Chief Operations Officer
± Heads day-to-day IS operations
4. Chief Project Officer
± Oversees all projects and project managers
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Different periods of recent history have
seen executives with different backgrounds
³running the show´
± Manufacturing = in the early 1900s
± Sales and Marketing ± 30s to 50s
± Finance ± 70s to 90s
Problems and scandals
± Future ± perhaps now CIOs have the most
appropriate backgrounds to run companies
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