BCIS 5150
What do we mean by an IT portfolio?
- Strategic dependence on existing operating systems (how operationally dependent the organization is on IT) - Strategic impact of applications development portfolio (how much competitive advantage the organization gains from IT) - Classifications based on categories: o Factory - low strategic dependence, low strategic impact o Support - low strategic dependence, low strategic impact(not much dependence on IT and not much competitive edge over competition) o Turnaround - high strategic impact, low strategic dependence o Strategic - high strategic impact, high strategic dependence(highly dependent on IT and gain a lot of competitive edge over competition)
Who might be an IT stakeholder?
- The people involved in or affected by project activities o Project sponsor o Project manager o Project team o Support staff o Suppliers o Users o Opponents to the project
A CIO may be given one of three areas of focus - what are they and describe them.
- Turnaround/ transformation: using IT to lead or enable organizations to fundamentally change business models or leverage business model in a unique way - Strategic support: using IT to provide support for achieving organizational strategy (as opposed to helping drive the strategy) - Value/cost efficiencies: managing IT in a way that is low cost for the organization
What were the three types of IT leadership/value of IT?
- Type 1 (low on the time x business/size/complexity graph) o Control-oriented o "Benevolent dictator" o Functional applications o "can-do" - Type 2 (middle of the time x business/size/complexity graph) o Enterprise-orientated o Senior management team focus o Applications portfolio o Infrastructure building o Security/control - Type 3 (high on the time x business/size/complexity graph) o CIO o Strategy focus o Information resources
If your boss' boss got on the elevator with you asked you "what does it mean to leverage IT for business advantage" what would you say (in just a couple of sentences - your elevator stop is on the fifth floor!)?
- Understanding IT and having an IT person (or team) who understands my business. Using that team and IT to find ways my business could be better, smarter, faster, safer. Looking at my business and the industry it's in alongside technology and how it's advancing to see if there is an opportunity there.
One takeaway from the M&B article was 'deploy innovations consistently across the organization.' What does this mean?
- Whatever the new system is that you come up with for your company, make sure it is the same across the entire company - in every store so that everything is the same and consistent
What are key differences in the way an organization uses or views IT when the focus is on cost than when the focus is on transformation?
- When a business focuses on cost they are focused on how IT operates (low cost; less IT focus) - When a business focuses on transformation they are focused on how to use IT to make their business better (cost doesn't matter as much)
We talked about two types of contingency plans to help manage risks. What are they?
-Contingency plans for problems you can anticipate (user pushback, extra training needs, staffing changes) - Contingency plans for problems you cannot anticipate (loss of key players, disaster planning/interruptions)
Why is Barton surprised by Williams' offer?
1. He doesn't have an IT background 2. He thought he would be named COO 3. He has a finance background
IT budgets commonly are divided into approximately which proportion?
40% projects/applications and 60% infrastructure/maintenance
Which of the following is not a major category of IT costs in most organizations?
All of these are major categories of IT costs in most organizations
We talked about why it may be difficult to get a good view of IT spending in an organization. Which of the following are reasons for this?
All of these are reasons
The Stabilization phase of taking charge includes which of the following activities:
All the answers are correct; Building the IT leadership team, delivering in-flight projects, Improving IT governance processes
What are issues to consider in prioritizing IT projects?
- "Know what you don't know" - IT governance involves not just prioritizing IT projects but creating and managing a process for the prioritization o Info systems need to work well together after the merge * IT doesn't control the IT budget and thus decisions about IT priorities are a joint decision with business units · Chargebacks o Barton (book) learns there may be a security breach but no one knows for sure * This will take priority if so * Likely need to pursue fixes to security holes that have been identified but not approved for funding to fix · Security projects have been denied funding even though security is critical to the organization's operations and reputation
What is IT project management?
- "The application of knowledge, skills, tools and techniques to project activities to meet project requirements"
What is a PMO (Project Management Office)?
- A formal unit charged with overseeing the management and development of projects as programs and portfolios
What is an IT Program in the context of IT project management?
- A program is a group of related projects managed in a coordinated manner to obtain benefits and control not available from managing them individually o Example: infrastructure, applications development, and user support o Program manager provides leadership and direction for the project managers heading the projects within the program
Our book suggests that one view of IT spending categories is money spent on application development and money spent on infrastructure. This is a theme that runs throughout the first chapters of the book. What is meant by each of these categories and what are the tradeoffs between them?
- Application portfolio (applications developed for the business units) - Infrastructure (underlying hardware/software/services to enable use of the application portfolio) - Holding infrastructure (hardware, networks, databases, data centers) relatively constant means more money to meet demand for new applications o Eventually infrastructure needs updates and expansion to support new applications o PG 70 IN BOOK FOR EXAMPLE OF THE EVOLUTION OF TRADEOFFS
What are the major types of costs for organizational IT?
- Application portfolios (applications developed for the business units) - Infrastructure (hardware, desktops, data center, etc. for use of the application portfolio) - Capital investment (for IT large scale, long term investments: infrastructure, data center, disaster recovery/continuity, security) - Expenses (network operations, applications development and maintenance)
We talked about three types of IT budget governance - what are they and describe them.
- Business units control the IT budget for work (this is the company's current approach in Adventures) o IT generates money via chargebacks for services o Decisions are made jointly between IT and business units o Risks in addition to decisions are shared by business and IT o IT has little power to pursue necessary infrastructure projects like security, network consolidation, if the business units don't understand how these impact the business - IT controls the IT budget o Allows tighter governance across the organization by the IT department o IT has more freedom to pursue infrastructure focused projects that provide the platform on which all other IT runs o Risk of failure is not shared with the business - Shared model - IT gets some portion of the IT budget that it controls and business units have IT budgets o Shared decision making and risk is in place o IT has freedom to pursue platform based projects
Why is there IT spending in non-IT budget lines?
- Business units may purchase devices or services directly from vendors on non-IT budget lines that result in IT line costs o Still need support from IT which is an IT cost o May need integration with existing IT o Outage at a service provider could shut down service for the unit and even though the service was purchased independently, IT is held responsible for the outage
Why doesn't IT control its own budget in some organizations?
- Businesses don't understand IT and that it affects everyone because they are only focused on spending what they need - Don't give IT control of their own budget and instead do chargeback
What position(s) do CIOs report to in an organization and how might that influence their job?
- CEO, CFO, other c-suite executives - If they don't report to the CEO, they are not actually part of the c-suite
The McAfee and Brynjolfsson article also posited that the best way to leverage IT was through process innovation. They gave three examples - one from CVS and insurance processing; one from Cisco and streamlining their order checking process; and one from Otis Elevator and integrating their sales, order fulfillment, field installation and job closing processes. Briefly describe these.
- CVS o Surveys in 2002 revealed that customer satisfaction was declining * Rx orders were being delated during the insurance check o Decided to move the insurance check forward in the rx fulfillment process o The drug safety review screen now appeared after the insurance check screen was completed * Helped boost customer satisfaction without compromising safety o Used IT to replicate the new process throughout all it's pharmacies nationwide within a year * Performance increased and overall customer satisfaction rose o IT underlying this initiative served two key roles * Helped the process changes stick: clerks and pharmacists couldn't fall back on old habits once new protocol was embedded * Allowed quick and easy propagation of the new processes to all 4,000 sites, radically amplifying the economic value of the initial innovation - Cisco o Had nine different tools for checking an order status * Each pulled info from different repositories and defined key terms differently, leading to circulation of conflicting order-status reports around the company o Company reconfigured its IT system for consistent execution of key business processes including market to sell, lead to order, quote to cash, issue to resolution, forecast to build, idea to product, and hire to retire * Payoff was strong performance over the past few years - Otis Elevator o Took a hard look at its core processes and ended up replacing old software with a new enterprise technology platform e*Logistics * Designed to connect sales, factory, and field operations worldwide through the internet o Defined 4 processes - sales, order fulfillment, field installation, and job closing * Designed new platform to ensure that improvements in the wat each proves was carried out occurred uniformly, every time, everywhere · Not only had significantly shorter sales-cycle times but higher revenues and operating profit - Cisco & Otis gained a market edge by competing on technology enabled processes - carefully examining their working methods, revamping them in interesting ways, and using readily available enterprise software and networking technologies to spread these processes changes to far-flung locations so they're executed the same way every time
What are some issues to consider in the selection/retention of IT projects?
- Categorize projects in order of importance within units - Evaluate tradeoffs between competing interests projects assigned equal importance by different units o How to know if a project is 'yellow' or 'green' (medium vs high importance) o If projects are on-going and the decision is which to stop and which to go on with, then look for * How well they are meeting schedule/budget * How critical they are to the organization and organizational strategy
What is the tension between local autonomy and organizational consistency as it relates to IT governance?
- Deployment efforts heighten the tensions - present in every sizable company o Conflict often exists by default rather than by design o Managing this tension reaps tremendous benefits
What was the primary focus of Aetna's use of IT to create value in our case? In other words, what kinds of things did Aetna want to use IT to do here?
- Digital platform o Telehealth to decrease hospital visits o One consumer portal to access all info o Medication adherence program, rx refills/wellness exam notificationso Incentives/rewards o Data from end to end - office visit to rx o Health care options o One place for all info
What are some steps a CIO can take to be seen as part of the business leadership (as opposed to just the IT leadership)?
- Enhancing and maintaining relationships with other business leaders - Develop talent in the IT areas who understand the business - Educate the CEO and peers on IT enabled opportunities - Clearly express compelling vision for leveraging IT in the business- In addition o Speak the language of the business o Strong connection to the CEO and peers o Stay on top of emerging possibilities o Be on top of cost/efficiencies o Understand IT impact on revenue/costs of P&L
What are some ways to help ensure that a project doesn't get on the 'death march' path?
- Ensure that information, even bad news, flows up to project managers so they can make informed decisions earlier- Anticipate issues and risks with contingency plans early- Don't be afraid to make the hard decision to stop a project that is out of control
What are the key things a Board of Directors focuses on?
- Financial stability of the organization - Potential disruptions to business models - Changes to the organization's competitive landscape
The McAfee and Brynjolfsson article posited that IT investments can make a significant competitive difference for an organization. They used three metrics to measure competition - what are they and describe them.
- Gaps between leaders and laggards in an industry o Performance spread in an industry is large when the leaders and laggards differ greatly on standard performance measures such as return on assets, profit margins, and market capitalization per dollar of revenue - the kinds of numbers that matter a lot to senior managers and investors - Winner-take all markets o In a concentrated industry, just a few companies account for the bulk of the market share * In the study in the article, focused on the degree to which each industry became more or less concentrated over time - High churn among rivals in a sector o A sector is turbulent if the sales leaders in it are frequently leapfrogging one another in rank order * Instead of having someone at the top for years, it changes quickly
What are some things we talked about that might make a CIO ineffective, even if they have an IT background?
- High turnover (if not the highest turnover position in most organizations) - High volatility/change oriented - Failure to bridge the gap between 'business smarts' and 'tech smarts'
We talked about the view of IT as an expense versus that of IT as an investment. What do each of these mean and how might you tell which view an organization has?
- IT as an investment view suggests the organization leverages IT to gain competitive advantage (transformation or strategy focus) - IT as an expense suggests the organization sees IT as a cost to manage (cost focus) - Look at CEO strategic goals and see if it aligns with IT portfolios
CIOs are expected to balance IT knowledge with business knowledge. What does this mean? And how does this make the CIO job different from other functional area executive jobs?
- IT crosses departmental boundaries and no other functional area interacts with as many different organizational parts as IT does - Business savvy people in the IT area, IT savvy people in the functional areas - Value is achieved when people can operate in the area of overlap and understand the business and the technical and make them work together seamlessly
What should be the Board of Directors role in IT?
- IT does not directly enter into these areas of focus, but Board of Directors' decision have impact on IT o Board of Directors need to take notice of IT because their decisions affect it and can have ideas/suggestions but have to watch the line between oversight and management
The Carr article suggested that IT is a commodity and therefore no longer provides competitive advantage. We read responses to his article that directly disagree with this point and then we read the McAfee & Brynjolfsson article that provided evidence that the opposite is true. What is it that enables companies to differentiate themselves using IT?
- IT is not static so difficult to say what is commodity - How you leverage IT is how companies differentiate themselves; just having IT is not enough you must know how to use it to your advantage o Everyone might have the same setup but not be able to leverage the value in the same way * Knowledge, skills, how IT is viewed in the company, etc. is how you get the value
What are some barriers that prevent IT managers from becoming business leaders?
- IT managers' lack of business skills/competencies - Business leaders don't understand the importance of IT - IT's distance from customers and their experiences - IT managers lack of time on strategy issues - IT managers often left out of strategic discussions around leveraging IT - Lack of collaboration with the business - Lack of support for IT from the CEO - Wrong authority/reporting line to achieve what the organization wants - PG 37-39 IN ADVENTURES BOOK
What are some of the challenges we talked about for managing IT spending?
- IT often doesn't formally control the amount that gets spent on IT - Business units budget for IT then IT does a chargeback for services - Even if IT is provided formal control for spend, it is usually driven by business unit needs - Business units may also be free to buy services directly from external vendors
How does success/failure in one IT project impact other projects?
- IT projects are not developed in isolation, nor do they operate in isolation - IT projects are related to other IT projects o Funding o Staffing o Integration
The book talks about managers with 'business smarts' and those with 'tech smarts.' Our book's CIO recognizes that the value of IT is in bridging what he calls the capability gap between those. What is one way to do that in terms of the knowledge IT and business people have in the organization?
- If business and technology people shared more knowledge, more understanding, they'd end up better able to communicate with each other, which should result in getting work done more smoothly. - People able to operate in that area of overlap where 'value' was created were a resource to be hired, retained, and cherished(figures on pg 13/14)
What is meant by chargeback in IT budgeting?
- Internal pricing for billable hours - Internal formula for overhead to help allocate fixed costs (like phones, emails, etc.) - Applies the costs of IT services, hardware, or software to the business unit in which they are used o Can help administrators see what factors are driving costs and to budget accordingly
What is the Agile approach to IT project management?
- Iterative rather than linear approach - Smaller pieces of the project completed in shorter time frames - Allows greater control over quality as well as time and cost management - Not suitable for all projects, but it is one approach many companies use for at least some of their IT projects
What are some reasons that IT projects run behind schedule or over budget?
- Lack of discipline in project management - Lack of change management control - Organizational needs change as project progresses
Why is it hard for IT to show direct benefits tied to installation of a new system?
- More useful for understanding what IT enables rather than success - Productivity paradox - we spent all this $ on IT why can't we connect it to the benefits it creates o Redesign of a website so sales went up - hard to show this
We talked about three basic characteristics that governance and IT prioritization need to exhibit - what are they and describe them.
- Needs to be owned by the business units not IT o Helps to ensure projects meet business needs o Helps to ensure business unit 'buy-in' on resources and changes the project requires o Gives business units a stake in the outcomes - Needs to exhibit transparency of process and visibility of decision consequences o Helps to build trust between business units and IT o Helps to move the decision making process forward when something goes wrong o Helps people feel that they are part of the outcomes - Needs to provide for continuity and within project focus o Helps to prevent switching resources from one project to another without formally weighing risks and losses this could entail o Helps to ensure resources remain assigned to projects based on rational decision making rather than reactive responses to perceived priority changes - All of these ensure that IT projects are aligned with what the organization needs to execute its organizational strategy
What background might a CIO have (e.g., IT experience, organizational experience, industry experience) and how is this different than selection of a typical C-suite executive?
- Often hired from outside the company, even outside the industry - Often hired from areas outside of IT
What is an IT project portfolio and why is it important?
- Organizations group and manage projects and programs as a portfolio of investments that contribute to the entire enterprise's success - Consists of projects and programs managed as a group to achieve corporate objectives - Project portfolio managers help their organizations make wise investment decisions by helping to select and analyze projects from a strategic perspective
What is the role of the Board of Directors in an organization?
- Oversight not management - Are to be independent from the company - Typically brought on the board for skills/knowledge they bring to the table
What is IT governance?
- Process by which IT budget allocation and prioritization decisions are made - Processes that ensure the effective and efficient use of IT in enabling an organization to achieve its goals
We can think of IT projects as those that directly support competitive position and those that indirectly support competitive position through effective and efficient underlying or back-end technology. What are the trade-offs between these two when selecting projects?
- Projects classified as "compete" enable greater organizational competition in the marketplace (Directly support competitive position) - Projects classified as "quality" improve the quality of specific operations/processes using IT (Indirectly support competitive position through effective and efficient underlying or back-end technology)
What is a "death march project?"
- Projects with a bad plan, but managers stick with - They continue on, absorbing time and resources, in spite of evidence that they are failing to meet schedule, budget, and even original goals - Can delay, even derail, subsequent projects
"Know what you don't know." What does this mean in terms of managing IT?
- Realize there are categories of things you know and categories of things that you don't know (will help to bridge the gap between IT leaders and business executives and make the business run smoothly)
What was the primary focus of WestJet's use of IT to create value in our case? In other words, what kinds of things did WestJet want to use IT to do here?
- Restructuring IT organization o Lines of communication and cooperation between IT and business units o Determine priority projects, planning/budgeting o 24/7 IT support o Second data center/risk control
What is meant by risk management in IT projects? What are some examples of risks in this context?
- Risk is anything that could potentially impact the project's timeline, performance, or budget risk management is the process of identifying, categorizing, prioritizing, and planning for risks before they become issues - Examples: o User pushback, extra training needs, staffing changes, loss of key players, disaster planning/interruptions
What are the three pieces of the IT project management triple constraint? Briefly describe these three and then tell how they are related.
- Scope (how big the project is) - Time (how long it will take to complete) - Budget/cost (how much money it will need) - Project managers strive to meet this triple constraint; while facilitating the entire process to meet the needs and expectations of project stakeholders
Why is it often difficult to really get a good picture of total IT spending?
- Spending outside the IT budget • Services/products that are IT, but that may fall into non-IT spend on a budget • Mobile devices, small hardware, etc.. • Business units may purchase in a non-IT line thus not captured as IT cost
A newly appointed CIO takes charge in 3 distinct, overlapping phases. Which answer below describes the general sequence of phases?
Entry, Stabilization, Renewal
The Benefits Dependency Network is a framework to:
Explicitly link required benefits with the business changes necessary to deliver those benefits
We talked about it being difficult to tie direct benefits to installation of new IT. Which of the following did we talk about as one of the reasons for that difficulty?
It isn't the IT itself that results in benefits, but thew way it is used/leveraged
The Entry phase of taking charge is focused on which of the following:
Learning and assessment
The outcome of the Renewal phase for the CIO is:
Legitimacy as a business leader
IT management has to be about... Management.
Profit. Risk. Return. Process. People.
Which position would a CIO not report to?
Top human resource management officer
More than any other group within a company, IT is positioned to...
Understand the business end-to-end, across departmental boundaries; no other department interacts with as many different parts of the business as IT.
Peppard, Ward and Daniel identified seven questions to ask in order to produce a benefits realization plan. Which of the following is NOT one of those questions?
Why must we improve?, What changes are needed to achieve the benefit?, Who owns each benefit and is accountable for its delivery?, What benefits will be realized by each stakeholder?
IT leaders needed to possess a special kind of __________ to be effective in good times and bad, on the up cycle and on the down
ambidexterity
When functional areas control most of the IT budget, IT spending is tracked through a mechanism in which the functional areas pay IT for services and work. This is called what?
chargeback
"Know what you don't know" is a phrase that recurs in our book. Essentially, it means what, according to Jim Barton?
understand the categories of things you don't know
Business benefits are realized only when business users
Do things differently
When _____ smarts and ______ smarts are combined it creates value for the company.
Business smarts and tech smarts
What does CIO stand for?
Chief Information Officer
A newly appointed CIO must build this before being allowed to influence business strategy.
Credibility as the IT leader
