IS/IT Functional Specialty –
Role Structure
Role,
Structure, Capabilities
9/15/2011
PURPOSE
To consider the continuing
change occurring in the role,
str ct re and capabilities of the
structure
IS/IT functional specialtyy in firms
9/15/2011
Why IS/IT Structure?
> It’s Changeable
> IS/IT “Related” Resources Are Large and Growing
• 1-10% of revenue
• Majority of capital expenditures
> Importance
I
t
to
t Competitiveness
C
titi
• Efficiency (bottom line)
• Innovation (top line)
• Improved decision making (business
intelligence)
g
)
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7 S Factors Affecting Firm
Performance
¾ Strategy
¾ Structure
¾ Systems
¾ Staffing
¾ Skills
Skill
¾ Style
¾ Shared Values
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Functions are a Result of
Specialization
¾ Adam Smith – Efficiency
¾ Pin factory (20 fold)
¾ Process design and resource assignment
¾ Al Sl
Sloan GM in
i the
th 20’s
20’ –M
MF
Form Organization
O
i ti
¾ Specialization Creates a Need for Coordination
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Functional Specialties –
Value Chain
> Primary Activities
> Inbound & outbound logistics
> Operations
> Marketing & sales
> After-sale
Aft
l service
i
> Support Activities
> Human Resources
> Technology development
> Procurement
> Infrastructure
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IS/IT – A “New”
New Specialty
>
>
>
>
>
>
1950 – 60 Data Processing
1970 – 80 Add Management Information
1980 – 90 Add Information Technology
1990 – 00 Add Enterprise Information
2000 – 10 Add P
Process Gl
Globalization
b li ti
2010 – 20 ?
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Current Indicators of
Change
¾ Travelers Insurance – CIO is also Chief Innovation
Officer
¾ Cargill
C ill – Tartan
T t P
Project
j t Creates
C t a New
N
Team
T
¾ General Mills – Standardize Data
¾ Medtronic – Organize to Emphasize Innovation
¾ United Health Group – Two IS/IT Innovation Units
¾ Others?
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Empirical Evidence of
Change
¾ Adams, Larson and Xia – Centralization of technology
and applications
¾ Latest Work with Eric Larson – Centralization,
Standardization and Less Specialization
Standardization,
¾ Luftman Surveyy – From Federal to Central
¾ Gartner - Centralized
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What Relates to Structure ?
¾ In the 60’s Alfred Chandler (Harvard) observed that
strategy and structure go together.
¾ Detour – Consider strategy
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Strategy Field
Explain why some organizations
operating in similar conditions
perform differently
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Decision Focus in Strategy
> Scope – Territory of Operations
> Competencies – Basis of
C
Competitive
titi Ad
Advantage
t
> Governance – Decision Rights
Parallels with IS/IT Strategy
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Alternative Views of
Strategy
> Plan – Step1; if ____ , then Step 2 ; etc.
> Ploy – “fake “ plan
> Position
P iti – role,
l resources/capabilities,
/
biliti
structure
t t
> Perspective – comprehensive,
comprehensive long
long-term
term
> Pattern – post hoc observation
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Organization Levels in
Strategy
> Corporate – Mix of Business Units
> Business Unit – Basis of
Advantage in an Industry
> Function – Alignment ( Corporate?
Business Unit?)
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Alignment
> Function to Business
> Operations (internal) to Strategic (external)
> Th
Three Di
Dimensions
i
– Scope,
S
Competencies
C
t
i and
d
Governance
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Position (Strategy) of IS/IT
Function
> Role (Scope)
> Resources /Capabilities (Competencies)
> Structure
St t
(Governance)
(G
)
> Choosing a strategy for IS/IT means establishing the
role, capabilities and structure of the functional group
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Role?
> The expectation of the broader organization regarding
the functional specialty.
- Effective, reliable, secure, cheap operations
- Involvement in process improvement
- Involvement in product/service innovation
technology. Of Data
Data.
- Authority in standardization of technology
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Resources/Capabilities?
> Adams/Xia – Business W/I a Business
- innovate, operate, market, manage, adapt
> Weill
W ill & B
Broadbent
db t
- communication,
communication messaging
messaging, standardization
standardization,
security, operations, advice & support
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Structure?
> Configuration (relationships/network)
> Centralization
> Formalization
> Standardization
> Specialization
S
i li ti
__________
> Flexibility (Adaptability) - Stigler; Quality Literature ((variation)) - common cause/ specific
p
cause
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Specific Configurations
Agarwal and Sambamurthy – Relationships
> Partner – innovation (IS/IT = B.U.)
> Pl
Platform
tf
– infrastructure
i f t t
(IS/IT supports
t B.U.)
BU)
> Scalable – flexible (IS/IT supports via vendors)
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Specific Configurations
Weill and Ross
> Business Monarchy
> IT Monarchy
>F
Feudal
d l
> Federal
> IT duopoly
> Anarchy
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Specific Configurations
Gartner
> Heritage (efficient, reliable)
> Aligned (supportive)
>E
Engaged
d (agile,
( il b
business
i
value
l d
driven)
i
)
> Pervasive (transformational)
--- -----> Community (business unit owned/cloud)
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Reprise- Why Focus on
Structure?
> It’s changeable
> It’s changing
> Aff
Affected
t d by
b the
th Environment
E i
t
> Demands for integration, innovation, and
intelligence
> Uncertainty, volatility, pace
> Desire to imitate the larger
g Unit structure
9/15/2011
Major Forces
> Demand for Integration
> Demand for Innovation
> Demand
D
d ffor Intelligence
I t lli
(A l ti )
(Analytics)
> Desire to Imitate larger unit structure
> Environmental Uncertainty
Uncertainty, Volatility,
Volatility and Pace
9/15/2011
Demand for Integration
> Top Line – Customer Relationship
> Bottom Line – Supply Chain
> Regulation
R
l ti – SOX,
SOX EPA,
EPA FDA
> Knowledge ManagementManagement Sharing (Roberto 10/14)
> Economies of Scale/Scope ( diversification)
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Effects on Structure of
Demand for Integration
>
>
>
>
Configuration Change (CIO Rank)
More Centralization
More Standardization
Less Specialization
----------------¾ Less (?) Formalization
----------------> Centralizing Affect of IS/IT’s Position as a Coordinating
Mechanism
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Demand for Innovation
> More marketing – access to the user
> More creativity – less directed by the business unit
> Less
L
restricted
t i t d on resource use
> Access to technical specialists via sourcing
relationships
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Effects on Structure of
Demand for Innovation
> More Standardization --|
| <---- more communication
> More Centralization --|
> Less
L
F
Formalization
li ti
> Less Specialization
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Demand for Intelligence
> Infrastructure capabilities
> Embedded in processes/systems
> Embedded
E b dd d iin d
devices
i
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Effects of Demand for
Intelligence
> More centralization
> More formalization
> Mixed
Mi d standardization
t d di ti
> More specialization
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Environmental Uncertainty
> Technical – scale;sourcing
> Economic (cost/price) – globalization;recession
> Social
S i l ((norms)) - social
i l media;post
di
t office
ffi
> Political (regulation) – Dodd-Frank,
Dodd Frank EPA
> Organizational (imitation) - constraint
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Effects on Structure of
Technical Uncertainty
> Centralization – increasing
> Standardization – increasing
> Specialization
S
i li ti - ?
> Formalization - ?
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Effects on structure of
Economic Uncertainty
> Centralization – increasing
> Standardization – increasing
> Specialization – less
> Formalization - less
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Effects on Structure of
Social Uncertainty
> Centralization – increasing
> Standardization - increasing
> Specialization - less
> Formalization - less
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Effects on Structure of
Political Uncertainty
> Centralization – increasing
> Standardization – increasing
> Specialization ?
> Formalization - less
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Effects on Structure of
Organizational Environment
> Centralization – less
> Standardization – less
> Specialization – increasing
> Formalization - increasing
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Collateral Impacts
> Change – Resistance
> Curriculum – Enterprise System Implementation
> Human Resources – Broad Individuals with Access
to specialists
> Corporate
p
Strategies
g
– Importance
p
of IS/IT
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Change
> C group resistance
> Top down or bottom up
> Crisis
C i i motivator
ti t – competition
titi
> Available talent – Permanent and transient
> Training
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Curriculum
> Enterprise System Implementation- degree of
standardization (SAP)
> Social Media – Internal (knowledge
management)/External (customer relations)
> Business Analytics
y
– Technical vs. Practical
> OJT – University of Chicago
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Human Resources
> Breadth vs. Depth Expertise
> Local vs. Global Perspective
> Importance
I
t
off Users’
U
’ vs. Providers’
P id ’ T
Training
i i
> Importance of Turnover (+
(+, -))
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Corporate Strategies
> Corporate – Importance of match in mergers and
acquisitions.
i iti
S
Seminar
i
10/14
10/14.
> Business Unit – Key to Competition (Cost
(Cost, Niche
Niche,
Differentiation)
9/15/2011