Carl Adams
October 23,
23 2009
CIO Collaborative
Research on IS/IT
g
g
Organizational Design and Governance
10/22/2009
‰ Define the Role and Our Interest in the
R l off IS/IT
Role
‰ Complementary Views (5) of the IS/IT
Group’s Role
‰ Implications of the Evolution of the IS/IT
Group’s Role
‰ Discussion
10/22/2009
… describes the expectations
p
of the organization
g
10/22/2009
Data
Processing
g
MIS
IT
Business
Technology
1960
1980
2000
Source: Forrester 2007
10/22/2009
‰ “Clients
C e sa
are
e no
o longer
o ge sa
satisfied
s ed with ssimply
pya
aligning
g g
their technology to their business goals, but instead want
to fuse them together – a concept that Forrester calls
Business Technology (BT).”
‰ Innovation is the latest buzzword in the IT services
‰“Innovation
industry”
‰ “A firm’s competitiveness… is derived less from
inventive technologies and more from their innovative
business applications”
10/22/2009
“At
At least 75% of IT organizations will change
their roles in 5 years”
10/22/2009
High
Coordination
Unification
Low
L
Busin
ness Pro
ocess In
ntegratio
on
‰ Enterprise Architecture – the organizing logic for business processes
and IT infrastructure reflecting the integration and standardization
requirements of the company’s operating model.
Diversification
Replication
Low
High
Business Process Standardization
10/22/2009
Enterprise Architecture is not Information Technology Architecture:
Business
Data /
Process
Information
Architecture Architecture
Applications Technology
Architecture Architecture
10/22/2009
“Top performing companies have more mature architectures”
Business
Silos
10/22/2009
Standardized
Technology
gy
Optimized
Core
Business
Modularity
y
“… internal and external factors, such as increasing organizational
familiarity and expertise with core technologies, changing IT
functionality, or competitive dynamics, naturally encourage both
further experimentation
p
and increasing
g integration
g
of technology
gy with
core business processes. These changes trigger transition in the role
of IT”
10/22/2009
“In my twenty years as a senior executive in the area of
information systems and technology,
technology I have experienced
several significantly different expectations for the IS group….
Some of the variation in expectations can be related to the
nature of the companies and industries in which I served.
served
However, much of the variation reflects the evolution of
technological and global competitive conditions that place an
emphasis
h i on integration
i t
ti
and
d innovation
i
ti
i the
in
th organization.
i ti
As the demands on a company evolve so must the IS
organization evolve. ”
10/22/2009
High
Ge e a
General
Partner
Supporter
Business
Innovation
Partner
Low
w
IS Involvem
ment in Initiation off
ness Operrations Im
mproveme
ent
Busin
Operations
I
Improvement
t
Partner
Low
High
IS Involvement in Initiation of Business Innovation
Balagna, Adams, Xia 2008
10/22/2009
Why do we care that the role
of IS/IT is evolving?
10/22/2009
Performance = f (role/capability alignment)
10/22/2009
‰ McKinsey
c sey 7S
S Model
ode
‰ Hayes & Wheelwright
Product/Process Matrix
‰ Ball, Adams, Xia
Role Capability Matrix
10/22/2009
‰ Applegate,
pp ega e, Austin
us & McFarlan
c a a
‰ Forrester
‰ Gartner
‰ Ross, Weill, Robertson
‰ Balagna, Adams & Xia
10/22/2009
‰ Based
ased o
on McFarlan
c a a ((1984)
98 ) Matrix
a
‰ Business Implications of the IT Applications Portfolio
(Sustaining)
‰ Business Implications
p
of the IT Project
j
Portfolio
(Growth)
10/22/2009
►►
►►
Value to the
Business of
Existing
g
Applications
Factory
Strategic
Efficiency & Reliability
Operational Discipline &
Business Agility
Support
Turnaround
Low Cost, Stability,
Incremental Improvement
Experimentation &
Exploitation
►►
Impact of IS/IT Applications on
p
Future Industryy Competitiveness
►►
McFarlan, 1984
10/22/2009
IIncreasing
i familiarity
f ili it and
d expertise
ti with
ith core
technologies
Changing IT functionality
Competitive dynamics
10/22/2009
VS.
10/22/2009
Demand for Innovation
Potential for IT-enabled Innovation
10/22/2009
‰ IT a
are
e bus
business
ess p
process
ocess spec
specialists
a ss
‰ IT are key integrators
‰ IT is concerned for architectural coherence, technology
mastery, and shared services
‰ Business users are sophisticated
p
in IT
‰ Important to react to consumer technology
‰ Web 2.0 makes collaborative creativity important
‰ Mobile technology is important to business
‰ Governance of investment vs. support authority/
responsibility
10/22/2009
‰ Innovation
o a o is
s king!
g 1
‰ “A
A firm
firm’ss competitiveness…
competitiveness is derived less from inventive
technologies… and more from their innovative business
pp
applications”
40% of CEOs (2006) stress the importance of business
model innovations.
1
10/22/2009
‰ New
e bus
business
ess models
ode s 2
‰ New integrated, collaborative business processes
‰ New products
‰ New services and experiences
55% of C-level executives say new business models give
greater advantage than new products.
2
10/22/2009
Not to Align,
g ,
but to Fuze
(B i
(Business
Technology)
T h l
)
10/22/2009
10/22/2009
‰ Discovering
sco e g non-intuitive
o
u e bus
business
ess
opportunities in the “unflat” world
‰ Co-developing
Co developing best
best-of-breed
of breed
transformational solution
‰ Co-financing the solution deployment by
sharing risks and rewards with clients.
10/22/2009
‰C
Changing
a g g bus
business,
ess, technology
ec o ogy a
and
d markets
a es
‰ Increased complexity
‰ Commoditization of services 3 and capabilities
‰ Importance of process design
‰ Need to fuse technology, business process design and
business relationships
Themes for IT service deliveryy – virtualization, g
globalization, and
specialization
3
10/22/2009
‰ Globalization
G oba a o
‰ uncertainty
‰ novelty
‰ variation
‰ New IT Frontiers
‰ non-routine
non routine decisions
‰ leisure and lifestyles
‰ Consumerization of IT
‰ New delivery models (SOA, RTI)
10/22/2009
‰ Enable
ab e bus
business
ess ag
agility
ya
and
dg
growth
o
‰ Control IT costs
‰ Deliver quality service
‰ Provide business value
‰ Seize innovation opportunities
‰ Manage consumer devices in your business environment
‰ Deploy effective IT security
‰ Leverage
g networks
‰ Blend technology, process and business skills
organization-wide
10/22/2009
10/22/2009
‰ Analogy
A l
to b
business
i
ffunctions
i
((payroll)
ll)
‰ All technology sectors (software,
hardware,, networking,
g, and
telecommunications)
‰ Multi-sector vendors will reduce sourcing
integration complexity
10/22/2009
10/22/2009
Shift IS/IT management priorities
from technology
gy to business
process and relationships
(50% of large firms by 2011)
2011).
10/22/2009
10/22/2009
A strategic advantage is achieved if you
can build the capability
p
y to fuse technology,
gy,
business process design and business
relationships.
relationships
10/22/2009
10/22/2009
H it
Heritage
Aligned
Engaged
Pervasive
Embedded
(Type Z)
10/22/2009
• Tactical technology management
management, trustworthy
trustworthy,
focus on efficiency
• Strategic technology, management; align IT and
business as a whole
• Business systems leadership; enhance the
business, focus on agility and business value
• Information and process leader; information and
process assets transform the business
• IT is a commodity embedded in the business; BUs
own IT; sourcing and execution with no IT-specific
roles
10% by 2011
10/22/2009
10/22/2009
As th
A
the fifirm ttransitions
iti
th
through
h stages
t
off
Enterprise Architecture maturity, the role
of the IT group evolves
evolves.
10/22/2009
‰ Enterprise Architecture – the organizing logic for business
processes and
d IT infrastructure
i f t t
reflecting
fl ti the
th integration
i t
ti and
d
standardization requirements of the company’s operating
model.
model
‰ Enterprise Architecture is not Information Technology
Architecture
10/22/2009
Business
Data /
Process
Information
Architecture Architecture
Applications Technology
Architecture Architecture
10/22/2009
‰ Define/choose an Operating Model
‰ Develop a core diagram of a “system” that
encapsulates
l t the
th EA.
EA
10/22/2009
High
Coordination
Unification
Low
Bussiness P
Process Integrattion
Two dimensions – need for integration and need for standardization:
Diversification
Replication
Low
High
B i
Business
P
Process St
Standardization
d di ti
10/22/2009
Core Business Processes
Shared Data
Key
y Customers
C
Linking & Automation Technology
10/22/2009
10/22/2009
10/22/2009
Role of IT is to
build reusable
data and
business process
platforms;
assume that
standardization
s
a da d a o
enables
innovation.
Bu
usiness Mod
dularity
Role of IT is to
automate local
business
processes with
focus on costeffectiveness and
reliability.
e ab y
Optimize
ed Core
Standardized Tech
hnology
Businesss Silos
Role of IT is to
automate
specific
business
processes with
focus on
functionality.
u c o a y
Role of IT is to
provide seamless
linkages between
business process
modules built on
standard code;
process
p
ocess modules
odu es
linked through
standardized
interfaces.
Ross, Weill & Robertson, 2006
10/22/2009
10/22/2009
More Business
Than IT
Business M
Modularity
Business
Trust
Optim
mized Core
Technology
Management
Stan
ndardized Te
echnology
Busin
ness Silos
‰ CIO is the key driver of Enterprise
Architecture benefits.
‰ Role changes with EA maturity
G
General
l
Manager/
Innovation
Ross, Weill & Robertson, 2006
10/22/2009
Key concept is IS/IT
involvement in the business.
Business
Operations
Improvement
Business
Innovation
o at o
Is IS/IT present at the initiation of the
transformation discussion?
10/22/2009
High
Ge e a
General
Partner
Supporter
Business
Innovation
Partner
Low
w
IS Involvem
ment in Initiation off
ness Operrations Im
mproveme
ent
Busin
Operations
I
Improvement
t
Partner
Low
High
IS Involvement in Initiation of Business Innovation
10/22/2009
Supporter
Operations
Improvement
Leader
Business
Innovation
Partner
General
Partner
10/22/2009
• Transaction processing; low cost
• Operations applications
• Security
• Integration
• Efficiency
• Reliability
• New products/services ideas to complement business units
• Modify business model
• Major process innovation
• Major product/service contributor
• Significant business operations improvement
CEO Assessment of CIO
CIO Interest in Modified Role
C-Group
C
Group Acceptance of CIO Role
Ability off IS/IT Groups
Abilit
G
to
t Attract
Att t and
d Retain
R t i
Appropriate Talent
10/22/2009
10/22/2009
‰ Substantial Change
‰ Drivers
¾ Increasing
I
i familiarity
f ili i and
d expertise
i with
i h core
technologies
¾ Changing IT functionality
¾ Competitive Dynamics
¾ Changing
g g Business,, Technology
gy & Markets
¾ Increased Complexity
¾ Commoditization of Services
¾ Importance
I
t
off process design
d i
10/22/2009
‰ Expertise
¾ More business; less technology
¾ Innovation
¾ Integration / Standardization
¾ Multi-sector Sourcing
‰ Issues
¾ Attention to Changes
¾ Interest in Change
g
¾ Availability of Appropriate Talent
10/22/2009
Year
g Assumption
p
Planning
p()
2010
‰ 25% of applications will be delivered by IT-utility-style
computing, enabled by real-time infrastructure (RTI), up from
less than 5% in 2005
2005.
0.7
10/22/2009
Year
Planning Assumption
p()
2011
‰ 50% of IT organizations will refocus on brokering services and
shaping business demand, rather than on delivering IT services
directly, from about 5% in 2004.
07
0.7
‰ Design and management of business processes and relationships
will supersede the management of technology as the leading value
contribution for more than 50% of former IT organizations
g
in $1
billion-plus enterprises and for more than 30% of established IT
services businesses.
0.7
‰ The IT profession will split into four domains of expertise:
technology, information, process and relationships.
0.8
‰ IT organizations in 2011 will have 20% fewer people, 40% less inhouse technology roles and double the number of information,
process and business roles compared with those in 2005.
0.7
10/22/2009
Year
g Assumption
p
Planning
p()
2012
‰ IT contribution will be cited in the top three success factors
by at least half of top performing businesses; and IT barriers
will be cited in the top three failure factors by at least half of
the lowest performers.
0.7
‰ Businesses
B i
th
thatt connectt the
th design
d i off information
i f
ti and
d
business process with technology will exceed average sector
performance by at least 15% until at least 2011.
07
0.7
‰ Business processes, information and relationships will be
0.7
more than half the value focus of most former IT organizations
g
in large enterprises.
10/22/2009
1
• Enabling business agility and growth, containing costs, delivering
service
i quality
lit and
dd
demonstrating
t ti value
l ffor th
the b
business
i
– allll att once.
2
• Providing continuous business value – not just IT project value.
3
• Seizing opportunities presented by technology innovation.
4
• Moving from owning the IT organization to contracting business
services.
5
• Blending technology, process, and business skills organization-wide.
10/22/2009
6
• Managing the invasion of consumer devices into the business
environment.
i
t
7
• Deploying effective IT security.
8
• Developing and managing an efficient and flexible infrastructure.
9
• Leveraging networks.
10
• Participating in business policy and strategy; implying less direct
p
in-house and less in-house operational
p
execution.
development
10/22/2009
‰ What are the characteristics of this transformation that
you have noticed in your organization?
‰ Is your IS/IT function embracing or shunning this
change?
h
?
‰ How is your particular role changing as a result?
10/22/2009
CIO Collaborative
Research on IS/IT
g
g
Organizational Design and Governance
10/22/2009