MANAGING
INFORMATION
TECHNOLOGY
FIFTH EDITION
CHAPTER 15
MANAGING THE INFORMATION
SYSTEMS FUNCTION
E. Wainright Martin  Carol V. Brown  Daniel W. DeHayes
Jeffrey A. Hoffer  William C. Perkins
THE CHALLENGES FACING
IS LEADERSHIP
 Rapid technological change
 Exploding applications and data
 Growth in business management
understanding of technology
 Frequent external shocks
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
 IS leadership must manage these
organizational assets:
Human resources
 Organizational data
 Physical infrastructure
 Applications portfolio

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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Developing Human Resources
 Provide specialized IT
training for IS
professionals and others
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Possible IS Management Positions
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Figure 15.1 Selected IS Management
Positions (1 of 3)
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Possible IS Management Positions
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Figure 15.1 Selected IS Management
Positions (2 of 3)
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Possible IS Management Positions
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Figure 15.1 Selected IS Management
Positions (3 of 3)
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Improving the Physical Infrastructure
 Develop policies and
procedures to manage
an IT system’s physical
assets – computer
hardware and networks
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Improving the Physical Infrastructure
 Infrastructure management issues addressed
in policy statements:
1.
2.
3.
4.
5.
Location
The workstation
Supported operating systems
Redundancy
Supported communications protocols
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Improving the Physical Infrastructure
 Infrastructure management issues addressed
in policy statements (cont.):
6.
7.
8.
9.
10.
Bandwidth
Response time on the network
Security versus ease of access
Breadth of network access
Access to external data services
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Managing the Applications Portfolio
 Most companies cannot operate without
software applications – they are critical assets
 Just as physical infrastructure, software
portfolio needs managed as an asset
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Managing the Applications Portfolio
 A company must know:
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
What software it owns
Where it is located
What it does
How effective it is
What condition it is in
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Managing the Applications Portfolio
 Policies and guidelines must exist for the
development and maintenance of IS
applications
 Maintenance should be treated as an activity
necessary to preserve an asset’s value
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Managing the Applications Portfolio
 Application portfolio policies must address:
1.
2.
3.
4.
Assumed user
Application location
Process-driven or data-driven design
Evaluation criteria for new applications systems
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MANAGING THE ASSETS IN
AN IS ORGANIZATON
Managing the Applications Portfolio
 Process-Driven Design
 Collects,
manipulates,
and stores only data
needed to operate a
particular process
 Most often used in the
past
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 Data-Driven Design
 Concentrates
on all
data needed and
collects into database
 Each application
accesses common
database for needed
information
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES

Ten key issues:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Developing effective change management system (Chapter 12)
Ethical use of IT (Chapter 16)
Agreeing upon the role of the IS organization
Selecting effective IS leadership
Creating an active partnership with business managers
Determining an outsourcing strategy
Designing an equitable financing system
Deploying global information systems
Designing an appropriate IS organization and governance
system
10. Ensuring regular performance measurement
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
1. Agreeing Upon the Role of the IS Organization
IS organization:

Role is continually changing

Needs a mission statement

Must be future-oriented while fulfilling today’s
requirements

Must be aligned closely with business activities
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
1. Agreeing Upon the Role of the IS Organization
IS organization is expected to:
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
Demonstrate business understanding and maintain close
communication with business managers
Respond quickly to changing business needs
Help reengineer business processes to be more customer responsive
Ensure business can participate in e-commerce
Keep final customer in mind
Build systems that provide direct customer benefit
Help business managers make better decisions with information
Use IT for competitive advantage
Help business integrate IT
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1. Agreeing Upon the Role of the IS Organization
IS organization is also expected to:

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

Be steward of organization’s IT resources
Deploy IT resources throughout the organization
Facilitate productive use of resources
Lead development of information vision and IT architecture
Communicate vision and architecture
Maintain managerial control over important information resources
Administer corporate data
Make current and new IT available at lowest possible cost
Help business managers know and use technology
Develop partnership with business managers to exploit technology
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
2. Selecting Effective IS Leadership
Chief Information Officer (CIO):







A member of executive management team
Needs mix of business and technical knowledge
Guides and unifies entire organization’s IT resources
Masters understanding of business, products, vendors, sales
channels, customers, and competition
Recognize IT advantages and where to apply
Hires good people and delegates
Works with executive management team to achieve
competitive advantage
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
2. Selecting Effective IS Leadership
Senior IS Management Issues:

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

Improving data and IT planning, especially linking IS to the business
Gaining business value through IT
Facilitating organizational learning about and through IT
Refining the IS unit’s role and position
Guiding systems development by business managers
Managing organizational data as an asset
Measuring IS effectiveness
Integrating information technologies
Developing systems personnel
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
3. Creating an Active Partnership with Business Managers
Partnership – a critical strategy based on sustaining a
long-term relationship between IS and business
management
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
3. Creating an Active Partnership with Business Managers
IS steering committee or advisory board used to:

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Ensure frequent interaction
Set priorities
Check progress
Allocate scarce resources
Communicate concerns
Provide education
Develop shared responsibility
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
4. Determining an Outsourcing Strategy
Outsourcing – hired outside services to perform some of a
company’s IS operations
Application service providers (ASPs) – provide total
systems to organizations, ranging from competitive
intelligence systems to broad ERP applications
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
Outsourcing:



Allows an organization to pay only for what it uses
Trend might relate to the position of the CIO
Popular, largely due to:




Fast pace of technological change
Dissatisfaction and costs related to past in-house services
Must be both a remedy for service failures or costs and
a strategic choice
Should not be used for strategic information systems
with security or privacy issues
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
Key factors in selecting an outsourcing vendor:



Vendor reputation
Quality of service
Flexible pricing
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MANAGEMENT SYSTEM ISSUES
5. Designing an Equitable Financing System
Typical measures used to track IT costs:





Total IT budget as percentage of total organization
revenues or income
Total IT budget as percentage of total organization
budget
IS personnel costs as percentage of total organization
professional personnel salaries and wages
Ratio of hardware and software costs to IS personnel
costs
Costs for IT hardware and software per managerial or
knowledge worker
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MANAGEMENT SYSTEM ISSUES
5. Designing an Equitable Financing System
Why is it hard to measure IT costs?

Some IT costs are hidden

No relationship to benefits included in
these measures

Benefits may happen after development
costs occur
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INFORMATION TECHNOLOGY
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Measuring Benefits
 No simple way to measure value
added benefits of IT
 Can track IS performance measures
over time
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
Controlling IS Costs
 Use IS organization’s budget
 Divide costs:
Personnel
 Equipment and software
 Outside services
 Overhead

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MANAGEMENT SYSTEM ISSUES
Chargeback Systems
IS chargeback process – places control of IS spending
with business managers, and is used to better understand
true costs
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MANAGEMENT SYSTEM ISSUES
5. Designing an Equitable Financing System
Why use a chargeback system?






Assign costs to those who consume
Control wasteful use of IT resources
Overcome belief that IT costs unnecessarily high
Provide incentives using subsidy
Change IS to be more business driven
Encourage managers to be knowledgeable
consumers
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MANAGEMENT SYSTEM ISSUES
5. Designing an Equitable Financing System
Successful chargeback systems must be:






Understandable
Timely
Controllable
Accountable
Clearly linked to benefits
Consistent with IS and organizational goals
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6. Deploying Global Information Systems
Region and country issues influencing
global IT management:
1.
2.
3.
4.
Country telecommunications infrastructures
Legal and security considerations
Language and culture
Time zone differences
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
6. Deploying Global Information Systems
Key trends of global outsourcing:



Offshore development centers – permanent offshore
presence
Near-shore sourcing – outsourcing to countries close to
home and overlapping time zones
Multisourcing – relying on multiple service providers in
a number of companies, based on price and skills
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MANAGEMENT SYSTEM ISSUES
6. Deploying Global Information Systems
Global team manager traits:
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


Multiculturalist
E-facilitator
Recognition promoter
Internationalist
Traveler
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
7. Designing an Appropriate IS Organization
and Governance System
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Figure 15.8 Classic IS Organization
Structure
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
7. Designing an Appropriate IS Organization
and Governance System
 Types of IS Organizational Design:




Centralized – IS applications and resources housed,
managed, and controlled centrally
Decentralized – business units have complete control of
their own IS resources
Federal – attempt to achieve benefits of both centralized
and decentralized
Customized – mixed design in large enterprises where
each division determines best design for that division
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Centralized Decentralized Federal Customized
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Figure 15.9 Common Designs for
the IS Organization
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
7. Designing an Appropriate IS Organization
and Governance System
 Organization design depends on:





How rest of business is organized
Type of customer markets, products, and
geographical spread
Role of IT within the organization
Reporting level of most senior IS leader
Types of technologies managed by IS organization
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Figure 15.10 Four Types of IS
Governance Mechanisms
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
8. Ensuring Regular Performance Measurement
 Necessary for internal customers to regularly
evaluate IS organization
 Need to show if promised cost savings are
realized
 Required:


Agreement on measurable criteria
Metrics to judge work quality
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
8. Ensuring Regular Performance Measurement

IS Evaluation Criteria
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Meeting business objectives
Responding rapidly and economically to new needs
Expanding business or services
Developing an architecture and plan
Operating reliable and efficient technology resources
Focusing on the customer
Providing quality IS staff
Reducing size of backlog
Satisfying users
Adopting new technologies
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Figure 15.11 IS Evaluation Criteria
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INFORMATION TECHNOLOGY
MANAGEMENT SYSTEM ISSUES
8. Ensuring Regular Performance Measurement
 Other measures to evaluate IS performance:

Service level agreements with internal business units
can be used to evaluate IS performance

Annual surveys for each major system

User satisfaction surveys
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