The Top IS Job Chapter 2 Information Systems Management In

The Top IS Job
Chapter 2
Information Systems Management In
Practice 7E
McNurlin & Sprague
PowerPoints prepared by Michael Matthew
Visiting Lecturer, GACC, Macquarie University – Sydney Australia

Chapter 2
 The responsibilities of the head of the IS function now go
far beyond operating highly efficient “production
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
 This lecture / chapter discusses the top IS executive’s job,
looking first at the top job itself by summarizing six major
responsibilities, and then exploring several ways the
information systems function is evolving in organizations
 The SABRE system, Lifescan, BP, Aetna Life and
Casualty, Duke Energy International, Wal-Mart Vs. Kmart,
AXA Financial, and Rexam provide examples of how the
role of information systems management is changing

 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
 Now = IT is pervasive and is a mandatory link between enterprises
 Responsibilities of the head of IS now go far beyond operating highly efficient
‘production 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

Where Is The IS Organization Headed?
• The Escalating Benefits of Information Technology
– Kenneth Primozic, Edward Primozic, and Joe
Leben introduce the notion of “Waves 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

Where Is the IS Organization Headed?
Escalating Benefits of IT

Waves of Innovation
– Below the line (Saving $)
Wave 1: Reducing costs
Began in the ’60s
Focused on increasing the productivity of individuals
and business areas by e.g. automating manual
Wave 2: Leveraging Investments
Began in the ’70s
Concentrated on more effective use of corporate
Systems justified on ROI, cash flow etc.

Waves of Innovation
– Above the line (Making $)
 Wave 3: Enhancing Products & Services
 Began in the ’80s
 Attention shifted to using IT to produce revenue by gaining strategic
advantage or creating entirely new businesses
 Wave 4: Enhancing Executive Decision Making
 Began in the late ’80s
 Changed fundamental structure of organizations
 Created real-time business management systems
 Waves 1 & 2 = could be done at ‘any time’ (and are still being
 Waves 3 & 4 = must be implemented once an industry leader has
set a precedent
 Companies that don’t do = cease to be competitive

Waves of Innovation
– Above the line (Making $) cont.
 Wave 5: Reaching the Consumer
 Began in the ’90s
 Uses IT to communicate directly with consumers leading to
 Distribution, and
 Service strategies
 Changes the rules of competition
 Management must be involved in guiding IT use once
you ‘cross the line’
 Management must steer the company in the new (evolved)
business environment
 Not the ‘techies’

• IT has become an essential piece of business strategy
• Not keeping up in IT may even mean going out of
• 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 ‘centralized’
Traditional Functions Are Being
Nibbled Away

• The traditional set of responsibilities for IS has
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
Traditional Functions Are Being
Nibbled Away cont.

• The traditional set of responsibilities for IS has
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
Traditional Functions Are Being
Nibbled Away cont.

• IS started ‘centralised’ and evolved into a ‘federal model’:
– Some things (standards, operations) = centralised
– Others (application development) = dispersed locally to best meet local
• To make the federal model work better, companies are
shifting attention from roles to processes
• The IS department can be viewed as managing three
overall processes (Figure 2-6):
– Driving innovation
– Managing change
– Supporting infrastructure
Toward IS Lite
(another ‘view’)

• The traditional functions still need to be performed but the following
trends are moving their performance out of the IS department and
into other parts of the organization or to other enterprises:
1. Distributed systems
– Software applications migrating to user areas
2. Ever more knowledgeable users have taken on increased IS
3. Better application packages
– Less need for ‘armies’ of programmers, analysts etc.
4. Outsourcing
Traditional Functions Are Being
Nibbled Away (Figure 2-2)

• (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 ‘Squeeze’ on Traditional IS Activities (Figure 2-4):
– Growing External Services
– Growing Capabilities of Users
• ‘Future’ Roles for IS (Figure 2-5):
– Broker
– Systems and Information Architecture
New Roles are Emerging

• Johnson and Johnson subsidiary
• New CIO = agenda to align the department with the business
• Focussed on execution and measurement to gain credibility
with the business units
• Strong project management and not allow scope creep
– Emphasis on staff with these skills
• Uses Johnson and Johnson Group ‘stuff’ combined with local
(LifeScan) ‘culture’
• Centralization of policies, procedures etc.
• Local implementation with all projects business led
– Moves ownership of systems to the business people
Case example: The ‘Federal’ Model

The CIO’s Responsibilities
 In line with the evolution of IS departments, the emphasis of the top
job has changed
 86 = Infrastructure
 89 = helping formulate corporate policy
 92 = IT as a catalyst for revamping the way enterprises worked
 98 = revamp business operations using IT continued with the Internet
(customers +)
 02 = the ‘technical member’ of top management
 04 = a cost and risk based approach Vs. “let’s get into e-commerce
 Today the cost emphasis remains
 Outsourcing continues to grow (amid controversy)
 CIOs are expected to do much more with not much more $$
 Also = under pressure:
 To implement protective measures
 New financial reporting e.g. Sarbanes Oxley
 Keep the IT innovations coming!!

CIO Responsibilities — History cont.
 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

CIO Responsibilities — History cont.
The Web Era
Started in the mid-1990s for some
Arose from the emergence of the Internet, and
esp. the Web as a business tool
Era is still in its ‘infancy’ but add to the CIO’s
‘job’ the role of business visionary
Relationship between CEO and CIO vary
along a wide spectrum

Four Aspects of the CIO role
1. Leading: Creating a vision by
understanding the business
2. Governing: Establishing an IS
Governance structure
3. Investing: Shaping the IT portfolio
4. Managing: Fostering change

 There are seven approaches CIOs are using to
understand the business and its environment:
1. Encourage project teams to study the
2. Concentrate on lines of business
3. Sponsor weekly briefings
4. Attend industry meetings with line executives
5. Read industry publications
6. Hold informal listening sessions
7. Become a “partner” with a line executive
1. Leading: Creating a Vision by Understanding
the Business

• Gather the following information about the
company and its industry:
– Current industry environment
– Business goals and objectives
– Major practices of competitors
– Pertinent government regulations
– The inputs, outputs, and resources of the firm
1.A Understand the Business:
Encourage Project Teams to Study the Marketplace

• It is recommended to ask the following questions
about each line of business:
1. Are we organized to serve that line of business?
2. Do we have an account manager in IS who has
responsibility for that line of business?
3. Do we have someone within that line of business who
oversees IT activity and talks the business language?
4. Do we have a sponsor in the line of business?
5. Do we have the attention of their management?
6. Does the line of business offer an opportunity to use
systems in new ways?
1.B Understand the Business:
Concentrate on Lines of Business

1.C Understand the Business:
Sponsor Weekly Briefings
• To understand the business, one needs to
understand the marketplace
• By sponsoring short presentations by the people
closest to a business, IS management can help
fix the problem of employees not being given
exposure to the marketplace without cutting into
working time too greatly

1.D Understand the Business:
Attend Industry Meetings with Line Executives
• Attending meetings with a line executive can be
even more enlightening because he or she can
explain what the company is or is not doing in
areas discussed by the speakers
• It is also likely to foster new friendships

1.E Understand the Business:
Read Industry Publications
• News publications provide information on
new products, current issues, company
changes, and so on
• They provide better analyses of industry
trends, discussions of ongoing research, and
projections about the future

1.F Understand the Business:
Hold Informal Listening Sessions
• Employees learn a lot by listening to each
other’s needs
• Meetings are held in a setting that is not
charged with tension, participation is
voluntary, and their purpose is to “just

1.G Understand the Business:
Partner with a Line Executive
• The Society for Information Management
presents an award each year to honor an IS
executive business team who have achieved
significant business results through their
• It reinforces partnering which is needed to
successfully guide and deploy IT today


1.2 Leading: Creating a Vision of the
Future and Selling It
• IS executives are no longer reactive, providing
only support
• They manage some of the most important tools
for influencing the firm’s future
• They are becoming more “proactive” by helping to
create a vision of the firm’s future and its use of IT
and selling those ideas to others

1.2 Leading: Creating a Vision of the
Future and Selling It:
What is a Vision?
• It is a statement of how someone wants the future to be or
believes it will be
• “We will put a man on the moon and return him safely to earth,
by the end of the decade” – JFK, early 1960s
• Beath and Ives present several corporate visions, e.g.:
– Otis Elevator
• “Any salesperson can completely order an elevator in a day”
– Rittenhouse Homes
• “Customers can get a house designed and built from a retail store”
• Once a vision is in hand, then a strategy can be formulated on
how to bring the vision into being

1.2 Leading: Creating a Vision of the
Future and Selling It:
Why develop a Vision?
• A vision of a desirable future can provide stability
when it sets a direction for an organization
– Today most corporate visions have an IT
underpinning – leveraging the Internet for
business purposes
– That vision sets their direction

• A champion is someone with a vision who gets it
implemented by obtaining the funding, pushing the
project over hurdles, putting his or her reputation on the
line, and taking the risk of the project
• The first step in encouraging champions is to find them
(they can’t be ‘appointed’!)
– They are opinion leaders, and they have a reputation for
creative ideas or being involved with innovations
– They have developed strong ties to others in their
organization, and they command respect within the firm
– They have the organizational power to get strategic
innovations implemented
1.2 Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects

Information systems champions need three
things from IS Management:
1. They Need Information:
• Champions need information, facts, and
expertise for persuading others that the
technology will work
• Information systems people can help them find
the information they are lacking
1. Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects cont.

2. They Need Resources:
• Giving champions “free” staff time is especially
helpful during the evaluation and persuading
portions of a project
• Champions are likely to need material resources,
such as hardware and software
3. They Need Support:
• Champions need people who approve of what
they are doing and give legitimacy to their projects
1. Leading: Creating a Vision of the
Future and Selling It:
Encouraging Champions of IT Projects cont.

2. Governing:
Establishing an IS Governance Structure
 The term ‘Governance’ has become prominent in all
areas of business including IT.
 IT Governance
 “The 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
 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

2. Governing:
Establishing an IS Governance Structure cont.
 ‘Governance’ has become more important in
the IS world because IT expenditures have
become so large and diverse that
management has had to find a way to bring
order to all the decision making
 Centralizing all IT decisions is not a solution
All business units and local employees need a voice
in the decisions to tailor their business to the local
culture and customers
Striking such a balance is a major IS emphasis

2. Governing:
Establishing an IS Governance Structure cont.
 Assigning Decision Rights (Figure 2-9)
 Six governance styles (the rows)
1. A business monarchy is where C-level executives
(CIO..) hold the right to make decisions
2. IT monarchy = where IT executives hold the right to
make decisions
3. Feudal is where business unit leaders (or delegates)
have decision or input rights
4. Federal means that the rights are shared by C-level
executives and one other tier of the business
5. A duopoly is where one IT group and one business
group share a right
6. Anarchy is where individual process owners or end
users hold a right

2. Governing:
Establishing an IS Governance Structure cont.
 Assigning Decision Rights (Figure 2-9)
 Five decision areas (the columns)
1. IT principles are high-level statements about how
IT will be used to create business value
2. IT infrastructure strategies state the approach for
building shared and standard IT services across the
3. IT architecture states the technical choices that will
meet business needs
4. Business application needs is where the business
defines its application needs
5. IT investment and prioritisation defines the
process for moving IT-based investments through
justification, approval and accountability

3. Investing:
Shaping the IT Portfolio
 IT investments are large and important to
company success
How to make such investments is getting increased
 Business executives can no longer “blame
CIOs” for poor IT investments
CIOs can only implement good systems
They are not responsible for changing business
practices to take advantage of those systems
= the job of line executives!

3. Investing:
Shaping the IT Portfolio – A Strategic View of Making IT Investments
 Intense competition in ‘non-regulated’
industries forced executives in these to
By investing in IT
By improving their business processes, and
By offering new products and services
 These innovations, in turn, increased
Virtuous circle (Figure 2-10)
Competition leads to innovation, which leads to
productivity increases

3. Investing:
Shaping the IT Portfolio – A Strategic View of Making IT Investments cont.
Sequencing and timing IT investments
Companies that reaped the highest
productivity generally sequenced their IT
investments so that new ones built on
existing ones
Timing is also important
‘Rush in’ only when it advances company goals,
builds on strengths and cannot be easily
replicated by competitors
‘Everybody is doing it’ = not a good reason

3. Investing:
Shaping the IT Portfolio – A Strategic View of Making IT Investments cont.
Complementing IT investments
IT investments do not reap anticipated
results until accompanying management
practices change to take advantage of
potentially better ways of working
NOTE: IT is not the only contributor to
increased productivity

3. Investing:
Shaping the IT Portfolio – A Tactical View of Making IT Investments
 Much attention has been placed on shaping
the IT portfolio as business executives seek
to maximize the business value of their IT
 Most companies have far more opportunities
than they can fund
Must find a way to prioritize the possibilities to best
support their business’ strategic objectives
 “Doing more with less”

3. Investing:
Shaping the IT Portfolio cont.
 Benefits Come More From the Discussions Than the
 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
 Put Projects into Categories Where They Are Comparable
 Once defined, projects belong in different categories and thus
require different treatment
 E.g. R&D projects can’t generate immediate tangible benefits
 Have a minimum $ – projects below this should be funded from
discretionary budget

3. Investing:
Shaping the IT Portfolio cont.
 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
 Prioritize Quarterly, and Apportion Your Budget
 Not wise to close the approved list of projects for a long
 Track projects and if significant deviations = consider
project costs, risks and benefits
 Be Consistent

4. Managing:
Establishing Credibility and Fostering Change
CIOs are in the change business
Information systems bring about change
BUT – before a CIO and the IS
organization will be heard as a voice for
change, the must be viewed as being
successful and reliable
To foster change, a CIO must establish
and then maintain the credibility of the
IS organization

4. Managing:
Establishing Credibility
 The first job of IS management is to get the “today”
operation in shape
 Until that task is accomplished, CIOs will have little credibility
with other top management
 Managing “today” includes:
 Computer operations
 Technical support (including networks)
 The help desk, and
 Maintenance and enhancement of existing systems
 Delivery oriented with a high level of service
 Some = outsource parts
 Once you have “today” working well – they will listen
to you re “tomorrow”

4. Managing:
Fostering Change
 ‘Techies’ presume a technically elegant
system is a successful one
Not so. Many technically sound systems have turned
into implementation failures because the people side
of the system was not handled correctly
 IT is all about managing change
New systems require changing how work is done
Focusing on the technical aspects is only ‘half’ the
job. The other job is change management

4. Managing:
Fostering Change cont.
People resist change, especially
technological change
May react in several ways:
Deny, distort or delude
ODR (and others) methodology:
Change agent

4. Managing:
Fostering Change cont.
Working across Organizational Lines
CIOs now find that systems they implement
affect people outside their firm
Supply side = fewer suppliers but deeper
Customer side = need buy-in to building /
using inter-business systems


The Office of the CIO?
 Some believe the office of the CIO is so broad it should be
handled by a team
 Four ‘positions’:
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
 IT is so critical to enterprise success and the know-how
needed to run it so deep and wide = management needs to
become a team effort

Whither CIOs?
 Different periods of recent history have
seen executives with different backgrounds
“running 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

• IT decision making must be ‘shared’ – The main responsibility for
managing the use of IT needs to pass to the line, while the
management of the IT infrastructure is retained by the IS group
• It is reflected in the following saying:
1. “We used to do it to them”- IS required end users to obey strict
rules for getting changes made to systems, submitting job
requests, etc.
2. “Next, we did it for them”-IS moved to taking a service orientation
3. “Now, we do it with them”-which reflects “partnering”
4. “We are moving toward teaching them how to do it themselves”
• To achieve this transformation, CIOs must play a leadership role in
their enterprise and develop partnerships with senior management,
internal and external customers, and suppliers

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