9/15/2011
IS/IT Functional Specialty –
Role, Structure, Capabilities
9/15/2011
PURPOSE
To consider the continuing
change occurring in the role,
structure and capabilities of the
IS/IT functional specialty in firms
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Why IS/IT Structure?
> It’s Changeable
g
> IS/IT “Related” Resources Are Large and Growing
• 1-10% of revenue
• Majority of capital expenditures
> Importance to Competitiveness
• Efficiency
y ((bottom line))
• Innovation (top line)
• Improved decision making (business
intelligence)
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7 S Factors Affecting Firm
Performance
¾ Strategy
gy
¾ Structure
¾ Systems
¾ Staffing
¾ Skills
¾ Style
y
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 Sloan GM in the 20’s –M Form Organization
¾ Specialization
p
Creates a Need for Coordination
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Functional Specialties –
Value Chain
> Primary
y Activities
> Inbound & outbound logistics
> Operations
> Marketing & sales
> After-sale service
> Support
pp Activities
> Human Resources
> Technology development
> Procurement
> Infrastructure
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IS/IT – A “New” Specialty
>
>
>
>
>
>
1950 – 60 Data Processing
g
1970 – 80 Add Management Information
1980 – 90 Add Information Technology
1990 – 00 Add Enterprise Information
2000 – 10 Add Process Globalization
2010 – 20 ?
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Current Indicators of
Change
¾ Travelers Insurance – CIO is also Chief Innovation
Officer
¾ Cargill – Tartan Project Creates a New Team
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
gy
and applications
¾ Latest Work with Eric Larson – Centralization,
Standardization, and Less Specialization
¾ Luftman Survey – 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
Competitive Advantage
> Governance – Decision Rights
Parallels with IS/IT Strategy
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Alternative Views of
Strategy
> Plan – Step1;
p ; if ____ , then Step
p 2 ; etc.
> Ploy – “fake “ plan
> Position – role, resources/capabilities, structure
> Perspective – comprehensive, long-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)
> Three Dimensions – Scope, Competencies and
Governance
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Position (Strategy) of IS/IT
Function
> Role (Scope)
(
p )
> Resources /Capabilities (Competencies)
> Structure (Governance)
> Choosing a strategy for IS/IT means establishing the
role, capabilities and structure of the functional group
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Role?
> The expectation
p
of the broader organization
g
regarding
g
g
the functional specialty.
- Effective, reliable, secure, cheap operations
- Involvement in process improvement
- Involvement in product/service innovation
- Authority in standardization of technology. Of Data.
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Resources/Capabilities?
> Adams/Xia – Business W/I a Business
- innovate, operate, market, manage, adapt
> Weill & Broadbent
- communication, messaging, standardization,
security, operations, advice & support
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Structure?
> Configuration
g
((relationships/network)
p
)
> Centralization
> Formalization
> Standardization
> Specialization
__________
> Flexibility (Adaptability) - Stigler; Quality Literature (variation) - common cause/ specific cause
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Specific Configurations
Agarwal and Sambamurthy – Relationships
> Partner – innovation (IS/IT = B.U.)
> Platform – infrastructure (IS/IT supports B.U.)
> Scalable – flexible ((IS/IT supports
pp
via vendors))
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Specific Configurations
Weill and Ross
> Business Monarchy
> IT Monarchy
> Feudal
> Federal
> IT duopoly
> Anarchy
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Specific Configurations
Gartner
> Heritage (efficient, reliable)
> Aligned (supportive)
> Engaged (agile, business value driven)
> Pervasive ((transformational))
--- -----> Community (business unit owned/cloud)
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Reprise- Why Focus on
Structure?
> It’s changeable
g
> It’s changing
> Affected by the Environment
> Demands for integration,
g
, innovation,, and
intelligence
> Uncertainty, volatility, pace
> Desire to imitate the larger Unit structure
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Major Forces
> Demand for Integration
g
> Demand for Innovation
> Demand for Intelligence (Analytics)
> Desire to Imitate larger unit structure
> Environmental Uncertainty, Volatility, and Pace
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Demand for Integration
> Top
p Line – Customer Relationship
p
> Bottom Line – Supply Chain
> Regulation – SOX, EPA, FDA
> Knowledge Management- Sharing (Roberto 10/14)
> Economies of Scale/Scope ( diversification)
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Effects on Structure of
Demand for Integration
>
>
>
>
Configuration
g
Change
g ((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
g – access to the user
> More creativity – less directed by the business unit
> Less restricted 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 Formalization
> Less Specialization
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Demand for Intelligence
> Infrastructure capabilities
p
> Embedded in processes/systems
> Embedded in devices
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Effects of Demand for
Intelligence
> More centralization
> More formalization
> Mixed standardization
> More specialization
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Environmental Uncertainty
> Technical – scale;sourcing
;
g
> Economic (cost/price) – globalization;recession
> Social (norms) - social media;post office
> Political (regulation) – Dodd-Frank, EPA
> Organizational (imitation) - constraint
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Effects on Structure of
Technical Uncertainty
> Centralization – increasing
g
> Standardization – increasing
> Specialization - ?
> Formalization - ?
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Effects on structure of
Economic Uncertainty
> Centralization – increasing
> Standardization – increasing
> Specialization
p
– less
> Formalization - less
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Effects on Structure of
Social Uncertainty
> Centralization – increasing
> Standardization - increasing
> Specialization
p
- less
> Formalization - less
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Effects on Structure of
Political Uncertainty
> Centralization – increasing
> Standardization – increasing
> Specialization
p
?
> Formalization - less
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Effects on Structure of
Organizational Environment
> Centralization – less
> Standardization – less
> Specialization
p
– increasing
g
> Formalization - increasing
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Collateral Impacts
> Change – Resistance
> Curriculum – Enterprise System Implementation
> Human Resources – Broad Individuals with Access
to specialists
> Corporate Strategies – Importance of IS/IT
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Change
> Cg
group
p resistance
> Top down or bottom up
> Crisis motivator – competition
> Available talent – Permanent and transient
> Training
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Curriculum
> Enterprise
p
System
y
Implementationp
degree
g
of
standardization (SAP)
> Social Media – Internal (knowledge
management)/External (customer relations)
> Business Analytics – Technical vs. Practical
> OJT – University of Chicago
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Human Resources
> Breadth vs. Depth
p Expertise
p
> Local vs. Global Perspective
> Importance of Users’ vs. Providers’ Training
> Importance of Turnover (+, -)
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Corporate Strategies
> Corporate – Importance of match in mergers and
acquisitions. Seminar 10/14.
> Business Unit – Key to Competition (Cost, Niche,
Differentiation)
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