Managing IT in Organizations

• The use of information technology has become widespread.
• IT is used to connect employees to accounting and production systems.
• IT is also used to compete with internet companies via web-based stores and customer service.
• Access to high-speed wireless networks is available from transportation, airports, and airplanes.
• This keeps people productive.
• Work teams can use meeting software and video conferencing without meeting in person.
• Workers use smartphones to access office emails.
• Schoolchildren use the Internet for research.
• The economic playing field is being leveled by IT connections.
• Citizens have access to world news.
• Geographical positioning systems help travelers and identify nearby stores.
• IT professionals design and manage computer hardware, software, and networks.
• All business managers are responsible for wisely investing in and utilizing information technologies.

Managing IT in Organizations

• Information technology (IT) includes computer technology (hardware and software) for processing and storing information.
• IT also includes communications technology (voice and data networks) for transmitting information.
• The information systems (IS) department manages IT.
• The IS department is responsible for supporting new ways of competing and working with computer systems and networks.
• Modern organizations rely on IT networks and applications.
• Organizations don't always have the same level of IT dependency over time.
• Changes in business leadership can impact IT investments.
• Businesses in different industries are dependent on IT.
• IT leaders need to plan and manage IT resources.
• Savvy business leaders need to envision strategic IT utilization.

Types of IT Resources

• Technology Infrastructure: Computers, software, and networks.
  • They enable organizations to conduct business and share information.
  • This sharing occurs across organizational units and with partners.
• Human Resources: IT professionals and managers possess technology, business, and interpersonal skills.
  • They plan for, design, and manage IT resources.
• Business/IT Relationships: Relationships between business and IT ensure resources align with business needs.

Technology Infrastructure

• Managing technology requires planning, building, and operating a computer and communications infrastructure.
• It's an information "utility" that ensures managers and employees have the right information when and where needed.
• Computer users expect computers and networks to be up and running.
• Organizations rely so much on IT that system failures impact employees' ability to work.
• Customer transactions cannot be processed, and suppliers cannot receive orders, leading to business revenue loss.
• The primary IT management role is to manage the costs and vulnerabilities of the computing "utility."
• Managing IT involves identifying new technologies and tailoring them to improve how a company does business.
• Managing assets involves skilled IT managers, professionals, and active business manager participation.
• Physical technology assets include computer hardware, software, telecommunications, and data networks.
• There is increased demand for computing power, data storage, communications speed, and user devices.
• Technology assets provide access to an enterprise system screen or a printer.
• Employees interact with the computer network for essential work aspects.
• Network or computer failure has high visibility, disrupting managers and leaders.
• IT service delivery failure can impact customers or suppliers.
• Information functions as an electrical utility: when it goes out, everything stops until service is restored.
• Bank network problems affect customers at ATMs. Airline traffic control problems impact travelers and partners.
• Technology decisions on IT equipment type and location involve trade-offs that affect IT service delivery.
• Input from business managers is needed for decisions.

Technology Trade-off Decisions

• Equipment Location: Most organizations operate in a distributed computing environment.
  • The physical location of hardware is critical for cost, control, and security.
  • Distributing equipment creates costs for managing hardware and safeguarding data.
  • There are costs for specialized personnel.
  • There are reasons to locate servers near plant or division managers rather than in a corporate data center.
  • Some countries are better locations for complex data centers.
• Client/Server Allocations: Policies on IT servers and workstations are driven by cost, convenience, and security.
  • Decide on the location of each type of computing work, at the workstation or at a server.
  • Determine which workstations should have independent intelligence or be a network device slaved to a central server.
  • Decide if telecommunications and computer components should be physically integrated.
  • Determine video conference integration on the workstation, local area network, or departmental server.
  • Define client access levels to outside resources.
• Operating System Standards: Some hardware vendors offer proprietary operating systems.
  • Decide how many and which operating systems to support.
  • Determine whether to support an "open source" operating system such as Linux.
  • Each different operating system creates more difficulty in sustaining a seamless network.
  • Support costs increase as systems are added.
  • Confining the company to one operating system reduces bargaining power, limits software access, and increases dependency.
• Network Redundancy: Organizations need network redundancy but full redundancy can be very expensive.
  • Determine redundancy in network design, including major nodes and pathways.
  • The cost for full path redundancy can be expensive.
  • "Hot" backup sites that allow fast recovery are expensive.
  • The lack of redundancy is expensive in terms of lost time.
  • Trade-offs for downtime and constant access must be made.
• Bandwidth Capacity: Decide bandwidth or transmission capacity between hardware nodes.
  • The decision depends on applications used. -Image and graphical applications require greater transmission rates. -Content-rich applications are growing.
  • Determine whether every client on the network should have broadband connectivity.
  • Specifications are critical to drive bandwidth investments.
• Network Response Time: Many users interact with the network, and are affected by the response time.
  • If the delay between pressing return and the response on the screen is short, users are satisfied.
  • If the delay is long, it is frustrating and hampers productivity.
  • Costs to reduce response delays increase, so input is needed in making decisions.
• Security, Privacy, and Network Access: Network security can reduce user access ease.
  • Decide on a balance between ease of access and maximum security, based on legal and regulatory environments.
  • Determine how ubiquitous access should be to specific networks and data.
  • Decide if all managers should have the same access rights.
  • Determine to what extent employees should have unrestricted Internet access. -Determine if viewing athletic events is permitted.

IT Human Resources

• Managing the people resources requires recruiting, developing, and retaining the best talent.
• There is a high demand for IT personnel with both technology skills and business knowledge and interpersonal skills.
• Business analyst and systems analyst roles require personnel who understand worker needs in marketing, accounting, and manufacturing, and in industry.
• IT professionals with business education and technical skills are valuable.
• Business-facing positions are effectively sourced by internal employees.
• There are concerns about the supply of college graduates with IT-related majors.
• Companies are using IT workers in less developed countries for software programming.
• Professionals are needed for important "in-house" IT roles.
• The people are the most important asset.
• Personnel costs are the largest item.
• Specific skills vary based on infrastructure standards and business nature.
• IT skills are classified into 5 categories: technical, project management, business domain, sourcing, and administration.
• The IT field has specific technical skill needs and specialized training.
• Organizations expand the involvement by establishing a direct reporting relationship with staff members in the HR organization.
• They develop formal coaching programs to reduce job-hopping.

Business/IT Relationships

• This resource type became prominent in the mid-1990s due to packaged software systems and the Internet.
• Joint IT-business decision-making is a way that investments in technology assets are made.
• Achieving business value from IT investments requires aligned goals and partnerships between business managers and IT managers.
• It's important to develop the business case and specify business requirement.
• If the IS leader has a CIO position, they are not the only one concerned with IT issues.
• Appointing a CIO signals that IT leadership needs to be a concern of all managers.
• Even if the IS leader is not in a formal CIO position, decisions require senior manager input.
• The business/IT relationship is a key IT resource.
• The strength will be dependent on the IS department's track record.
• IS and business managers collaborate on IT-related decisions, share goals, trust, and share investment risks.
• Each IS and business leader respects expertise and competencies.

Mechanisms for IT-Business Partnering

• Four types of horizontal mechanisms help build relationships.
• Which include formal structures. Formal Groups: councils or teams with specific oversight for IT activities such as steering committees.
• Formal Roles: individual positions with responsibility for linking activities between a central IT unit and business units, for example by IS managers serving as account managers.
• Informal Networking Practices: activities or practices to link managers from different business units, like physical co-location.
• Human Resource Practices: facilitate cross-unit problem-solving such as temporary job rotations.
• The most frequent structural mechanism is an IS advisory or steering committee with business leaders.
• This committee is responsible for approving and prioritizing IT investments.
• Meeting at least quarterly is important to reassess the application portfolio.
• Responsibilities include:
  • Reviewing and approving requests for new IT investments.
  • Setting priorities for IT projects.
  • Monitoring IT project progress against timelines and budgets.
  • Sharing the responsibility for achieving business value.
• Another approach is to establish formal integrator role positions.
• An IS manager may be designated to be an account manager with responsibility for responding to the IT needs for a specific business unit.
• That manager will often have an office adjacent to business managers for the supported unit.
• Strong relationships can also be fostered by informal networking practices and human resources practices.
• Mechanisms help build interpersonal networks among organizational members that can be used for information and knowledge sharing across different units.

IT Leadership Roles

• Organizations create an officer-level position for the senior IT executive: the chief information officer (CIO).
• All IT leaders are expected to work with senior managers to align IT resources with business goals.
• Senior IT leaders report directly to a president or CEO, to the CFO, or to the COO.
• CIOs come from a variety of backgrounds.
• Some managers can lead the IT organization because of abilities rather than techincal know-how.
• Managers report to the ciefd informmation officer and are responsible for operations (data centers and networks), technology and financial planning.
• They are also responsible designing and building the company's IT architecture, and acquiring and maintaining software applications.
• The latter includes IT managers (over corporate applications), and IT vice presidents (responsible for acquiring and maintaining applications for the company's business units). Unlike other IT managers, these three vice presidents report directly to the CIO, and to the general managers.
• This relationship helps ensure that the IS department's resources align with the business; it establishes and maintains a strong business/IT relationship.
• Positions that emerged include Chief security officer with the responsibility to plan and monitor compliance with new federal laws reporting requirement. the goal is to ensure that appropriate investments in technology and procedures for managing IT security risks are made. Other new roles help ensure that contracts with suppliers have successful outcomes.
• Senior business managers play IT leadership roles by serving on committees that approve and prioritize new IT investments and by sponsoring IT investments for their business areas.
• Other business managers serve as business process experts on IT project teams, selecting, designing, and implementing software packages.
• All of these business manager roles are critical because they are most knowledgeable about process changes needed to get the greatest benefits.
• Business managers can anticipate operational obstacles from application and actions can be taken to fix them.

IS Organization Responsibilities and Governance

• The IS organization is accountable for computer and network operations and software applications.
• In the 1970s activities were managed by a centralized IS governance design.
• As mid-range computers became more common, divisions had IS staff running applications on computers under their control, resulting in decentralized governance designs.
• Decentralized IS designs are still found in units that can achieve minimal benefits from sharing IS operations with other business units, with corporate IS setting IT architecture standards.
• Highly centralized designs are especially common for computer and network operations.
• Greater cost efficiencies can be achieved by purchasing and operating equipment and networks by a central IS group for all business units.
• IS decision-making authority is separate from data processing operations.
• Large multinationals and small businesses have implemented centralized governance designs for most software applications.
• A central IS group has responsibility only for "shared" applications:.
  • "shared" applications are used across organization such as financial and HR systems.
  • "local" applications are used only by a particular business unit, for instance at a manufacturing plant.
• Local applications can be supported by IS personnel that is part of a centralized IS unit.
• Hybrid IS governance designs combine elements of centralized and decentralized designs and are common today
• Organizations may choose a federal design for cost efficiencies from centralized computer and network operations and business units control over their own applications by decentralizing IS resources governance.
• A customized hybrid design is found in large, multidivisional firms. This can be from businesses choosing to have centralized control while other have a federal or decentralized to have more local control.
• Some organizations with centralized designs may operate as a "business within a business" by the IS unit with separate cost and revenue accounting and an agreed-upon transfer pricing scheme.
• Some senior business managers believe that this is the best way to hold both the IS and business units accountable for IT costs.
• It's a common approach for large organizations to combine the IS unit with other functional support organizations into a shared services unit, which may or may not be created as a separate legal entity.

Choosing Governance Designs

• A governance design needs to be aligned with the overall business characteristics.
• Centralized design will be likely applicable if a company is small.
• Federal or decentralized design is more likely for large company with multiple business units in operation with a high degree of autonomy.
• Custom design may be adopted to accommodate business unit preferences should some business leaders with in a large firm are reluctant to be responsible for governing IS resources.