Matakuliah
Tahun
: M0624/Information Technology Valuation
: 2008
MEASURES OF THE EFFECTIVENESS OF IT
MODUL 5. SESSION 17 – 20
INTRODUCTION
• EFFECTIVENESS OF IT (QUALITY OF IT), ALTHOUGH
WELL RESEARCHED, REMAINS A CONFUSING
SUBJECT FOR MANY BUSINESS MANAGER,
PARTLY DUE TO THE LACK OF STANDARD TERMS
OR DEFINITIONS.
• GARFVIN CLASSIFIED THE VARIOUS DEFINITIONS
OF QUALITY:
A. TRANSCENDENT: QUALITY CANNOT BE DEFINED,
“YOU KNOW WHAT IT IS”
B. PRODUCT BASED: DIFFERENCES IN QUALITY
AMOUNT TO DIFFERENCES IN THE QUANTITY OF
SOME DESIRED INGREDIENT OR ATTRIBUTE.
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INTRODUCTION
C. USER BASED: QUALITY IS FITNESS FOR USE
D. MANUFACTURED BASED: QUALITY MEANS
CONFORMANCE TO REQUIREMENTS
E. VALUE BASED: QUALITY MEANS BEST FOR
CERTAIN CUSTOMER CONDITIONS.
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INTRODUCTION
• THE EFFECTIVENESS OF IT SHOULD BE RELATED
FIRST TO THE ROLE OF IT IN SUPPORTING AND
ENABLING THE EFFECTIVE AND EFFICIENT
EXECUTION OF BUSINESS PROCESSES AND
BUSINESS ACTIVITIES, AND TO AVAILABILITY AND
CHARACTERISTICS OF IT AS PERCEIVED BY THE
PEOPLE WHO USE IT.
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INTRODUCTION
• THE APPROPRIATE MEASURES OF IT EFFECTIVENESS WILL BE CLASSIFIED, BASED ON BUSINESS
REQUIREMENTS OF 3 PERSPECTIVES:
A. BUSINESS PRODUCTS AND SERVICES,
PROCESSES, AND BUSINESS ACTIVITIES
B. USERS OF IT
C. IT SUPPLY
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IT EFFECTIVENESS
TECHNIQUES TO MEASURE IT AVAILABILITY IN USE
TODAY WERE DEVELOPED IN THE ‘70 AND ‘80
MAINLY TO MEASURE THE DEGREE OF DATA
PROCESSING COVERAGE OF FUNCTIONALITY
ORGANIZED BUSINESS ACTIVITIES.
THEY MEASURE, FOR EACH BUSINESS FUNCTION:
A. THE ACTUAL DEGREE OF AUTOMATION, BY FIRST
REVIEWING THE OUTPUT OF THE FUNCTION, THEN
ESTIMATING THE AMOUNT OF HUMAN WORK THAT
WOULD HAVE BEEN REQUIRED TO PRODUCE THAT
OUTPUT, ESTIMATING THE OART OF HUMAN LABOR
THAT HAS BEEN ELIMINATED BY IT.
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IT EFFECTIVENESS
B. THE POTENTIAL DEGREE OF AUTOMATION, BY
ESTIMATING THE MAXIMUM POSSIBLE ELIMINATION
OF HUMAN LABOR BY IT.
C. ACTUAL AUTOMATION AS % OF POTENTIAL
AUTOMATION.
THE RESULT OF THIS EXERCISE IS A PICTURE OF
THE AGGREGATED LEVEL OF AUTOMATION, WHICH
IS BASICALLY A BALANCE SHEET OF
OPPORTUNITIES FOR AUTOMATION OF BUSINESS
FUNCTIONS VERSUS THE ACTUAL DEGREE OF
AUTOMATION THROUGHOUT THE COMPANY.
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IT EFFECTIVENESS
• BUSINESS PROCESSES HAVE BECOME THE
PRIMARY ORGANIZATIONAL AXIS OF TODAY’S
NETWORKED ORGANIZATION.
• IN DEFINITION TERMS, A PROCESS IS A
STRUCTURED SET OF ACTIVITIES, ORDERED
ACROSS TIME AND PLACE, WITH A BEGINNING, AND
END, AND CLEARLY DEFINED INPUTS AND
OUTPUTS.
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IT EFFECTIVENESS
• ANTHONY SAID, THREE TYPES OF MANAGEMENT
PROCESS CAN BE DEFINED:
A. STRATEGIC MANAGEMENT: PROCESSES OF DECIDING THE OBJECTIVES OF THE ORGANIZATIONS,
CHANGES IN THESE OBJECTIVE, THE RESOURCES
USED TO ATTAIN THESE OBJECTIVE AND THE
POLICIES THAT GOVERN THE ACQUISITION, USE,
AND DISPOSITION OF RESOURCES.
B. MANAGEMENT CONTROL: PROCESSES BY WHICH
MANAGERS ASSURE THAT RESOURCES ARE
ACTUALLY OBTAINED AND USED EFFECTIVELY AND
EFFICIENTLY IN THE ACCOMPLISHMENT OF THE
ORGANIZATIONS OBJECTIVES.
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IT EFFECTIVENESS
C. OPERATIONAL CONTROL: PROCESSES OF
ASSURING THAT SPECIFIC TASKS ARE CARRIED
OUT EFFECTIVELY AND EFFICIENTLY.
OPERATIONAL CONTROL PROCESSES FOCUS ON
THE SUPERVISORY LEVEL OF MANAGEMENT
WHERE SPECIFIC ACTIVITIES ARE EXECUTED.
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IT EFFECTIVENESS
DAVENPORT ELEBORATES EVEN FURTHER AND
LISTS 9 TYPES OF IT, EACH WITH THE POTENTIAL
TO IMPROVE THE EFFECTIVE AND EFFICIENT MAKE
UP THE PRODUCTS AND SERVICES.
THEY ARE:
1. AUTOMATIONAL: ELIMINATING HUMAN LABOR
FROM A PROCESS
2. INFORMATIONAL: DELIVERING INFORMATION TO
CUSTOMER AS A SERVICE OR A PRODUCT, AND
CAPTURING PROCESS INFORMATION FOR
PURPOSES OF MANAGEMENT
3. SEQUENTIAL: CHANGING PROCESS SEQUENCE,
OR ENABLING PARALLELISM
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IT EFFECTIVENESS
4. TRACKING: CLOSELY MONITORING PROCESS
STATUS AND OBJECTS
5. ANALYTICAL: IMPROVING ANALYSIS OF
INFORMATION AND DECISION MAKING
6. GEOGRAPHICAL: COORDINATING PROCESSES
ACROSS DISTANCES
7. INTEGRATIVE: COORDINATING BETWEEN TASKS AND
PROCESSES
8. INTELLECTUAL: CAPTURING AND DISTRIBUTING
INTELLECTUAL ASSETS
9. DISINTERMEDIATING: ELIMINATING INTERMEDIARIES
FROM PROCESSES PASSING INFORMATION
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Figure 5.1: IT Characteristics per Type of
Business Process
Type of IT
Management Processes
Strategic
Management
Automational IT
√
Informational IT
√
Operational Processes
Operational
Analytical IT
√
√
√
Geographical IT
√
Integrative IT
Intellectual IT
Disintermediat-ing IT
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√
Innovation/
√
√
√
√
Problem
√
Sequential IT
Tracking IT
Production
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Figure 5.2: Normative IT Application portfolio (Manufacturing Example)
Firm Infrastructure
Office automation tools, workflow management tools, groupware tools, electronic mail, financial
management systems, etc.
Human Resource Management
Human resource information systems, demand-supply and career development modeling tools, etc.
Technology Development
CAD/ CAE, simulation tools, concurrent engineering systems, project management tools, etc.
Procurement
Inventory/ production planning systems, vendor evaluation systems, EDI, JIT control systems, etc
Inbound Logistics
• Production
planning systems
Operations
• Production
planning &
monitoring
Outbound
Logistics
• Customer
information systems
• inventory systems
• Inventory systems
• incoming goods
inspection and
quality control
• Fixed assets
management
• Distribution
planning and
monitoring
• Truck planning
• Management
information
• Shop floor control
• Route planning
• Management
information
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Marketing & Sales
• Customer
information
systems
• Sales history
• Inventory &
production systems
• Analysis and
presentation tools
• Order entry and
billing systems
• Account
receivable systems
• Expense reports
• Sales
administration
• Management
information
Service
• Customer
information
systems
• Product
information
systems
• Service history
• Dialog scripts
• Management
information
IT EFFECTIVENESS
• AS IN FIG 5.2. AN ORGANIZATION SHOULD MAP ITS
BUSINESS PROCESSES AND ANALYSIS THE EXTENT
OF CURRENT IT SUPPORT VERSUS TODAY’S IT
OPPORTUNITIES.
• THE ABOVE DESCRIBED TYPE OF QUANTITATIVE
MEASUREMENT OF COVERAGE DOES NOT YET
SHOW WHETHER OR NOT EXISTING IT SUPPORTS
USERS EFFECTIVELY.
• FOR THIS REASON, IT IS NECESSARY TO ESTABLISH
CRITERIA FOR DETERMINING THE EFFECTIVENESS
OF IT IN SUPPORTING THE USERS OF IT, AND
MEASURING THE DEGREE OF SUCCESS.
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IT EFFECTIVENESS FROM A USER
PERSPECTIVE
• MEASURING USER SATISFACTION IS A WAY TO
UNDERSTAND USER REQUIREMENTS AND NEEDS
FOR EFFECTIVE IT, BY ASCERTAINING THE
FUNCTIONAL CHARACTERISTICS OF IT, AS WELL AS
BY DETERMINING THE NEED FOR USER TRAINING
AND USER SUPPORT.
• USERS WILL ONLY BE SATISFIED IF THE RETURN ON
THE TIME THEY INVEST IN LEARNING IT
CAPABILITIES IS COMMENSURATE WITH THE
BENEFITS OBTAINED FROM USING IT.
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IT EFFECTIVENESS FROM A USER
PERSPECTIVE
• IT EFFECTIVENESS CRITERIA FROM USERS
PERSPECTIVE (BOEHM, GORRY, SCOTT MORTON,
20 YEARS AGO):
A. RELIABILITY OF IT APPLICATIONS: DEGREE TO
WHICH APPLICATIONS ARE AVAILABLE WHEN
NEEDED, OUTPUT IS RECEIVED ACCORDING TO
SCHEDULE, AND AVAILIBILITY PROBLEMS ARE
QUICKLY CORRECTED.
B. RELIABILITY OF INFORMATION: DEGREE OF
CORRECTNESS AND INTEGRITY OF THE DATA
PROVID-ED BY IT APPLICATIONS, AND THE DEGREE
TO WHICH OUTPUT AND DATA CAPTURED IN
APPLICATIONS KEEPS PACE WITH ACTUAL EVENTS
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IT EFFECTIVENESS FROM A USER
PERSPECTIVE
C. ACCESSIBILITY OF INFORMATION: PROMPTNESS
WITH WHICH INFORMATION REQUESTED FROM IT
APPLICATIONS IS RECEIVED
D. SECURITY OF INFORMATION: DEGREE TO WHICH
DATA IN APPLICATIONS IS PROTECTED FROM
UNAUTHORIZED ACCESS
E. EASE OF USE: SIMPLICITY OF USING IT
APPLICATIONS AND THE ADEQUACY OF OUTPUTS
IN ANY FORMS, E.G: SCREEN LAYOUTS, REPORT
FORMATS, ETC.
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IT EFFECTIVENESS FROM A USER PERSPECTIVE
•
•
•
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MANY ACTIVITIES HAVE CHANGED OR HAVE BEEN
REPACKAGED INTO NEW, BROADER ROLES FOR
EMPLOYEES.
LESS COMPLEX ACTIVITIES HAVE BEEN
ELIMINATED TO A GREAT EXTENT THROUGH IT, SO
THAT WORK HAS BECOME MORE SUBSTANTIVE IN
TERMS OF GREATER EMPHASIS ON KNOWLEDGE
AND INFORMATION SHARING AND A GREATER
DIVERSITY OF TASKS.
DOWNSIZING, AS THE FLATTENING OF THE
HIERARCHICAL ORGANIZATIONAL STRUCTURE,
HAS REMOVED SEVERAL LAYERS OF
MANAGEMENT IN GOOD NUMBERS.
IT EFFECTIVENESS FROM A USER PERSPECTIVE
• EMPLOYEES IN INFORMATION BASED ORGANIZATION
HAVE BECOME “EMPOWERED”, MEANING THAT
COMPANIES MORE AND MORE RELY ON EXTENSIVE
EMPLOYEE “SELF MANAGEMENT”
• RELIABILITY CHARACTERISTICS OF INDIVIDUAL IT
APPLICAT-IONS HAVE BEEN REPLACED BY REALIBILITY CHARACTERISTICS OF THE WHOLE SET OF IT
CAPABILITIES.
• RELIABILITY OF DATA PROVIDED BY IT APPLICATIONS
AND THEIR SECURITY REQUIREMENTS ARE BROADENED TO THE RELIABILITY AND SECURITY OF COMPLTE SETS OF DATABASES.
• ETC
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IT EFFECTIVENESS FROM A USER
PERSPECTIVE
• MATHEMATICALLY EXPRESSED, USER
SATISFACTION CAN BE DEFINED AS THE SCORE
FOR EFFECTIVENESS THAT SPESIFIC USER
REALLY NEEDS TO PERFORM HIS OR HER WORK
WITH SUPPORT OF THE GIVEN IT CAPABILITY.
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Figure 5.3 : New Models of Work and IT Effectiveness Requirements
New Models of work
IT Effectiveness Requirements
Working on a fast clock
High Availability, high “intelligence”
• Sub – second response times
• Short cycles, great intensity
• Rapid recognition of consequences of actions
• Hardly downtime, limited relaxation
Working with an eye on the customer
• Close and intensive customer contact
Open – ended, informative
• Access to ubiquitous information bases
• Broad insight in customer requirements
• Focus on world – class service
• Access to ubiquitous transaction history
• Decision support and office automation aids
Working in the open
Workflow – oriented, team – supportive
• Automated performance tracking
• Performance directly measurable
• Work – in – process clearly visible
• Shared work with team members
Working for oneself
• Decision making as well as doing
• Emphasis on results, not on process persè
• End – to – end responsibility, limited hand – offs
Working anywhere, anytime
• From the office
• At the client, in the field
• At home , from a hotel
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• On-line, real-time processing of every thing
• Automation of low – value work
• Workflow management support
• Groupware support
Flexible, user friendly
• Minimizing hassle, reflecting personal style
• Easy – to – configure processing capabilities
• Consistent foolproof integration of systems
Reliable, connective, secure
• Information synchronization all the time
• compatibility of tools
• Easy up load, download and output facilities
IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• IT EFFECTIVENESS FROM IT SUPPLY PERSPECTIVE
STEMS FROM OPERATIONAL AND MAINTENANCE
RELATED INTEREST OF THE PEOPLE RESPONSIBLE
FOR EFFECTIVE AND EFFICIENT IT SUPPLY,
RATHER THAN FROM USAGE OF IT CAPABILITIES
BY BUSINESS PEOPLE.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
OPERATIONAL ASPECTS:
• OPERATIONS RELATED EFFECTIVENESS CRITERIA
FOCUS ON THE ABILITY TO SUPPORT THE DAY TO
DAY SUPPLY OF IT SERVICES WITHOUT PROBLEMS.
• THEY REFER TO THE EASE OF OPERATION OF IT
CAPABILITIES, INCLUDING INCIDENT HANDLING,
PROBLEM RESOLUTION. OUTAGES REPAIR,
INVESTIGATION INTO MALFUNCTION, ETC.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• MAINTENANCE ASPECTS
MAINTENANCE RELATED EFFECTIVENESS
CRITERIA CHARACTERIZE THE SUITABLE OF IT
CAPABILITIES FOR USE OVER TIME.
• MAINTENANCE RELATED CRITERIA ARE:
A. TESTABILITY: THE EASE WITH WHICH IT CAN BE
TESTED TO ENSURE THAT IT PERFORMS ITS
INTENDED FUNCTION, AND THE AVAILIBITY OF THE
TEST DATA.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
B. MAINTAINABILITY: THE EASE WITH WHICH
CORRECTIVE MAINTAINANCE CAN BE CARRIED
OUT, INFLUENCED BY COMPLEXITY, QUAILITY OF
DOCUMENTATION, ETC
C. FLEXIBILITY: THE EASE WITH WHICH PERFECTIVE
AND ADAPTIVE MAINTAINANCE CAN BE DONE.
D. RE-USABILITY: THE EXTENT TO WHICH ALL OF
PARTS OF THE CAPABILITY CAN BE RE USED IN
OTHER CAPABILITIES.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• ARCHITECTURAL ASPECTS
DEAL WITH IMPORTANT CRITERIA SUCH AS
ENSURING LONGER TERM DURABILITY AND
RELIABILITY OF IT CAPABILITIES, TO COPE WITH
CONTINUOS BUSINESS CHANGE AND
TECHNOLOGICAL RENEWAL, AND AT THE SAME
TIME PROTECTING EXISTING IT INVESTMENTS IN IT
CAPABILITIES AS MUCH AS POSSIBLE.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• ARCHITECTURAL EFFECTIVENESS INDICATORS ARE:
A. PORTABILITY: EASE WITH WHICH AN IT CAPABILITY
CAN BE TRANSFERRED FROM ONE COMPUTING
ENVIRONMENT TO ANOTHER
B. CONNECTIVITY OR INTEROPERABILITY: EASE WITH
WHICH AN IT CAPABILITY CAN BE INTERLINKED WITH
OTHER CAPABILITIES; E.G: LINKING A WORKSTATION
BASED SPREADSHEET WITH A MAINFRAME
DATABASE
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
C. SECURITY: FROM AN IT SUPPLY PERSPECTIVE,
THE EXTENT TO WHICH SECURITY AND SAFETY
REQUIREMENTS CAN BE MET EFFECTIVELY AND
EFFICIENTLY.
THE COMBINATION OF FLEXIBILITY AND
PORTABILITY REQUIRE--MENTS OF IT
INFRASTRUCTURE IS REFLECTED IN THE
INCREASINGLY USED TERM SCALABILITY.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• SCALABILITY OF THE IT INFRASTRUCTURE AS THE
NUMBERS OF IT APPLICATION, RESOURCE REQUIREMENTS AND USERS GROW, AN IT INFRASTRUCTURE
SHOULD BE ABLE TO SATISFY THESE INCREASING
DEMANDS ON ITS RESOURCES (I.E., SHOULD
PROVIDE SCALABLE PERFORMANCE)
• SCALABILITY DOES NOT MEAN THAT AN OVERCAPACITY OF IT INFRASTRUCTURE COMPONENTS
SHOULD BE BOUGHT AT EXTRA COST AS A “SAFETY
STOCK” TO ALLOW FOR POSSIBLE, BUT CURRENTLY
UNKNOWN FUTURE CAPACITY REQUIREMENTS.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• ON THE CONTRARY, THE IT INFRASTRUCTURE
SHOULD SATISFY CURRENT REQUIREMENTS AND,
AT THE SAME TIME, BE EASY TO EXPAND.
• THE DEGREE OF SCALABILITY IMPROVES WHEN
THE IT INFRASTRUCTURE IS DEVELOPED ON THE
BASIS OF EMERGING OPEN-SYSTEMS STANDARD,
SUCH AS APPLIED IN THE INTERNET
ENVIRONMENT.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
• TRADEOFFS
WHEN EVALUATING THE EFFECTIVENESS OF IT, IT
MUST BE UNDERSTOOD THAT IT IS NOT ALWAYS
POSSIBLE TO MEET ALL EFFECTIVENESS
REQUIREMENTS OF BOTH USERS AND IT SUPPLY.
• THE REASONS ARE:
A. A HIGH LEVEL OF EFFECTIVENESS IN ONE FACTOR
MAY IMPLY A LOW LEVEL OF EFFECTIVENESS IN
OTHER FACTORS, I.E., A HIGH LEVEL OF SECURITY
MIGHT IMPACT THE EASE OF USE AND THE EASE
OF CONNECTIVITY, AND VICE VERSA.
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IT EFFECTIVENESS FROM
AN IT SUPPLY PERSPECTIVE
B. TRADEOFFS HAVE TO BE MADE BETWEEN HIGH
EFFECTIVENESS LEVELS AND THE ASSOSIATED
COSTS TO ATTAIN AND MAINTAIN THEM.
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CONCLUSION
• LET SEE FIG. 5.4.
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Figure 5.4: Measures of IT Effectiveness
Effectiveness Requirement
Effectiveness Criteria
Sample Measures (not limitative)
Business Processes and
Activities
IT coverage of management
Per types of IT: actual application of IT as %
IT coverage of operational processes
Per type of IT: actual application of IT as % of
Reliability of IT applications
Mean times between failures and to repair
Reliability of Information
Correct data as % of total data available
Accessibility of Information
Mean response time, batch turnaround time
Security of Information
Number of secured data sets as % of total
Ease of use
User – friendliness, rated on a ratio scale
Operational criteria, e.g.
• Handling
• Problem solving
• Outages repair
Number of outages, file recoveries, incidents,
of operation, rated on a ratio scale; mean
Maintenance related criteria:
• Maintainability
• Flexibility
• Testability
• Reusability
Mean effort / time to repair/ adapt / test;
components as % of total; quality of
ratio scale
Architectural criteria:
• Portability
• Connectivity
• Security
• Scalability
Mean time/ effort to transfer IT components,
components; number of IT components not
as % of total, secured data sets of % of total
Users of IT
IT Architecture and IT
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• THE END OF SESSION 17 – 20
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