Managing Information Technology

6th Edition
CHAPTER 15
LEADING THE INFORMATION
SYSTEMS FUNCTION

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 Leading the IS Function
• Three Assets (from chapter 1)
Technology ●
●Computer and communications infrastructure that
enables information sharing over standard IT platforms
Asset
Relationship ●
Established partnering relationships
Asset for joint IT-business decision-making

●
Pool of IT people talent for needed
Human Asset mix of technology and business skills

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 Leading the IS Function
– Managing the Technology Asset consists of two
major tasks
• Managing IT Service Delivery
• Managing IT Applications

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 Evolving IS Role
• Rapid technological change
• Exploding applications and data
• Growth in business management
understanding of technology
• Frequent external shocks

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 Evolving IS Role
• Important decisions for IS managers on how to
structure and govern the IS function

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 Designing the Organizational Structure and
Governance
• IS Governance
– The structure of the IS organization and how it is
governed have strengths and weaknesses
– “Classic” IS organization has a centralized
governance design
– Decentralized design is common in large
multidivisional companies and gives business units
total control over there is resources

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Designing the Organizational Structure and
Governance

Centralized Decentralized

Hybrid

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 Designing the Organizational Structure and
Governance
• Centralized Governance Design
– Common for computer operations
– Can create cost efficiencies
– May provide greater integration of applications
IT
IT operations
operations
& Applications

Business Unit Business Unit

Business Unit

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 Designing the Organizational Structure and
Governance
• Decentralized Governance Design
– Commonly found in organizations with highly
autonomous business units
– Each business unit has control over their own
applications and IT operations

Business
Business Unit
Unit IT
IT Business
Business Unit
Unit IT
IT
operations
operations &
& operations
operations &
&
applications
applications applications
applications

Business
Business Unit
Unit IT
IT
operations
operations &
&
applications
applications

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 Designing the Organizational Structure and
Governance
• Hybrid Governance Designs
– These designs seek to gain the advantages of both
centralization and decentralization
– Federal
• Computer and network operations are centralized
• Applications are decentralized
– Customized
• Mixed design where some business units may have
centralized operations and some may have
decentralized

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 Designing the Organizational Structure and
Governance
• Hybrid Governance Designs

IT Operations IT Operations
for some units

Business Business
Business Unit
Unit IT
Business Unit
Unit Business
Business Unit
Unit Business
Business Unit
Unit IT
operations
operations &
&
IT
IT Applications
Applications IT
IT Applications
Applications IT
IT Applications
Applications applications
applications

Business
Business Unit
Unit Business
Business Unit
Unit
IT
IT Applications
Applications IT Applications
IT Applications

Federal Design Customized Design

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 Designing the Organizational Structure and
Governance
• Shared Services
– In this model, centralized IT operations operate as
an autonomous business within the company to
provide ITShared
services
Service
– In large corporations,
IT Operations
& Applications multiple competing shared
service providers may be set up

Multidivisional
Business

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 Managing IT Service Delivery
• Managing technology decisions often includes
making trade-offs such as:
– Cost vs. security
– Cost vs. bandwidth or response time
– Convenience vs. security
– Standard vs. proprietary

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 Managing IT Service Delivery

Chargeba ●
Places control of IS spending with
business managers, and is used to
ck System better understand true costs

• Sample charges:
– IS personnel (time spent and rate for specific skills)
– Computer usage (or computer cycles used)
– Disk file space (data storage costs based on type of storage unit)
– Number of transactions processed
– Amount of computer main memory used (per unit of time)
– Number of users of an application

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 Managing IT Service Delivery
• Benefits of Chargeback Systems
– Assigning costs to those who consumer and
benefit from IT
– Controlling wasteful use of IT resources by
encouraging users to compare the benefits with
the costs and eliminate unprofitable use
– Overcoming erroneous perceptions that IT costs
may be unnecessarily high

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 Managing IT Service Delivery
• Benefits of Chargeback Systems Cont.
– Providing incentives by subsidizing the price of certain
services or innovative uses of technologies
– Changing the IS department’s budgeting process to be
more business driven, thus rewarding the IS
organization for improved service and greater efficiency
rather than technological change for its own sake
– Encouraging line managers to be knowledgeable
consumers of IS because they must directly pay for such
support

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 Managing IT Service Delivery

Characteristics of Good
Chargeback Systems
●
Understandable
●
Prompt and regular feedback
●
Controllable
●
Accountable
●
Relate to benefits
●
Consistent with IS and organizational goals

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 Managing IT Service Delivery
Service Level ●
Defines the client expectations for a specific
Agreements type of IT service as well as procedures for
when these expectations are not met
(SLAs)

• Service Level Agreements (SLAs) should contain:

– A simple definition of the service to be provided (e.g., help desk support)
– The name(s) and contact information of IS personnel to contact for this service
– A table listing the services to be provided and their costs (e.g., how quickly different types of
problems will be responded to, and the costs associated with providing this type of service level)
– Escalation procedures (e.g., who to contact if the agreed upon service response is not being
provided)
– A sign-off page for the appropriate business client and the IS liaison preparing the SLA document

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 Managing IT Service Delivery
• ITIL
– Information Technology Infrastructure Library
– Created by the British Office of Government
Commerce
– Processes that focus on the business aspect of IT
service delivery

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 Managing IT Service Delivery
• Outsourcing
– Can provide cost savings
– Commonly consist of long-term contracts
– Can be extremely complex
– Long-term contracts require months of
preparation prior to contract negotiation
– Difficult to bring outsourced services back in-
house
– Can be controversial

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 Managing IT Applications
• Legacy Systems
– Maintenance on older systems can make up a
large portion of IT budget
– Integration of new technology with legacy systems
can be difficult and time consuming

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 Managing IT Applications
• IT Applications Portfolio
– Most companies cannot operate without software
applications – they are critical assets
– Software portfolio needs to be managed as an asset
– A company must know:
• What software it owns
• Where it is located
• What it does
• How effective it is
• What condition it is in

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 Managing IT Applications
• Metrics
– New systems projects can be evaluated using
established guidelines
• Quality
• On time
• Within budget
– IS processes can also be evaluated
• CMM (or CMMI)
– Maturity of process is described by five levels
– CMM level is often used when evaluating outsourcing vendors

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 Managing IT Applications
• Project Management Office (PMO)
– This management structure can improve
performance metrics
– May provide benefits in the form of:
• Repeatable processes
• Established change management procedures
• Post-project reviews

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 Managing IT Human Resources
• IT Skills
– IS personnel need a variety of skills in the evolving
IS organization of today
– These skills can be organized into the following
categories
• Technical
• Project Management
• Business Domain
• Sourcing
• IT Administration

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 Managing IT Human Resources

Technical Project
Management
Skills Skills
●
●Systems analysis
●
●Systems design ●
Project team leadership
●Programming
●

●Systems testing
● ●Project planning, budgeting, &
●

●Database design/administration
●

●IT architecture/standards
● scheduling
●Operations (service delivery/ITIL)
● ●
Project risk management
●Mainframe
●

●Distributed systems
●
●
User relationship management
●Operating systems
●

●Voice/data telecommunications
●
●
CMM utilization
●Help desk/desktop support
● ●
Working globally/virtual teaming
●Continuity/disaster recovery
●

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 Managing IT Human Resources
Business IT
Domain
Sourcin Administra
Skills g Skills tion Skills
Account management & ●
Sourcing strategy
IT governance
●
●
●
communications
●Industry application
●
●
Third-party
knowledge provider selection
●
Financial
●Company-specific knowledge
●

●Function-specific knowledge
●
●
Contracting & legal management
●Business process design &
● ●
Vendor
reengineering
relationship
●
Internal HR
●Change
●

management/readiness management management

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 Managing IT Human Resources
• Top-Paying IT Professional Skills (2006)

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 Managing IT Human Resources
• Retention of IS Professionals
– Retaining qualified staff is a key issue for IS
managers
– Some common practices that managers uses can
be :
• Changing the work environment to be more favorable
• Increasing career development opportunities
• Providing community-building initiatives
• Establishing monetary or other employee incentives

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 Managing IT Human Resources
• Insourcing and Outsourcing of IT skills
– What skills should be outsourced?
– What skills should be retained in-house?

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 Managing IT Human Resources
• Outsourcing Benefits
– Reduced costs
– Obtaining expertise from large service provider
– Ability to expand geographically
– Flexibility to expand or reduce IT resources
– Access to new technology

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 Managing IT Human Resources

Application ●
Provide total systems to organizations,
Service ranging from competitive intelligence
Providers (ASPs) systems to broad ERP applications

• ASPs provide the application software and

host the application on the vendor’s
computers

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Managing IT-Business Relationship
• Relationship Asset
– This is one of the three important IT assets
– A strong relationship is characterized as a
partnership
– Business managers must work with IS managers to
realize investments in IT resources
– A formal statement of the IS organization’s role
may be helpful in strengthening a strained or
failed IT-Business relationship

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Managing IT-Business Relationship
• Horizontal Mechanisms
– Four types of mechanisms that help to build the
IT-Business relationship

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Managing IT-Business Relationship
• Horizontal Mechanisms
– Formal Groups Mechanism
• One example is the IS Steering Committee
• Their responsibilities might include:
– Approve requests for new technology investments
– Set priorities for application development and
implementation
– Monitor progress of IT projects against established timelines
and budgets
– Share responsibility and ownership for achieving business
value from IT investments

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Managing IT-Business Relationship
• Horizontal Mechanisms
– Formal Roles Mechanism
• Some organizations have integrator roles to help
achieve a strong IT-Business relationship
• An account manager is an integrator role who manages
the relationship between the IS organization and a
particular business unit

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Managing IT-Business Relationship
• Measuring Overall IS Performance

●
●A tool that provides an overview of organizational
Balanced performance that is not strictly based on financial
performance. In this tool, customer satisfaction,
Scorecard internal processes, innovation and learning, and
financial performance make up the metrics.

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Managing IT-Business Relationship
• Balanced Scorecard

Traditional Broader
performance performance
measures measures

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Special Issue ●
Managing a Global IS Organization

• Large multinational corporations operate

globally to remain competitive
• Operating effectively in multiple countries
provides unique challenges to IS managers
• Some of these challenges include:
– Country Telecommunications Infrastructure
– Legal and Security Considerations
– Language and Culture
– Time Zone Differences
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Special Issue ●
Managing a Global IS Organization

• Challenge: Country Telecommunications

Infrastructure
– Reliable telecommunication service is crucial for
organizations to communicate in multiple
locations
– Countries vary greatly in their telecommunications
infrastructure

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Special Issue ●
Managing a Global IS Organization

• Challenge: Legal and Security Considerations

– Intellectual property, copyright, and privacy laws
differ across countries
– Additional laws may govern the transferring of
data across national borders

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Special Issue ●
Managing a Global IS Organization

• Challenge: Language and Culture

– Even though many areas of the world are fluent in
English, language barriers can increase the risk of
managing global IT operations
– Cultural differences may require different
communication mechanisms

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Special Issue ●
Managing a Global IS Organization

• Challenge: Time Zone Differences

– Coordination between groups operating at
different times can be difficult
– The ability to practice 24/7 development may be
an advantage; however, the handoffs must be
managed carefully

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Special Issue Managing Offshore Outsourcing Arrangements
●
●

Offshore ●
Outsourcing that takes place outside of
the country where the client is located
Outsourcing
●
● This term describes offshore outsourcing to a
Near-shore geographic location that is much closer to the client
(e.g., to take advantage of overlapping time zones)

This term refers to the fact that there are multiple options for large firms
●
●

Best-shore when selecting an outsourcing site and each may provide a different benefit
(e.g., some offshore outsourcing sites provide overlapping time zones, while
others allow 24/7 development because the time zones do not overlap)

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Special Issue ●
●Managing Offshore Outsourcing Arrangements

• Offshore Outsourcing Capabilities

1. Capability to strategize
2. Offshore readiness
3. Vendor selection
4. Contract facilitation
5. Relationship governance
6. HR management
7. Knowledge management
8. Distributed work management
9. IS organizational change
10. User Change

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