Week 5
Monday, February 20
• Networked Organizations
• IT Infrastructure and Operations
• Strategic Alignment
• IT Adoption
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
1
Leveraging IT
Business
IT
Alignment
Vision
Strategy Business networks
Strategy
(Competitive Advantage)
Process Reengineering
(Control, enhancing, leveraging)
Capabilities
Capabilities IT infrastructure
Alignment
Value
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
2
Management Challenge Issues
• IT infrastructure as a strategic resource
– Types of infrastructures
• Independent - without regard to strategies
• Reactive - development in reaction to a particular
thrust
• Interdependent - coalignment with the strategic
context
– Modifications to the IT infrastructure signal
implications for possible changes and
improvements in strategy, while modifications
to strategic thrusts trigger appropriate changes
in the IT infrastructure
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
3
Move to Networked Organizations
IT-Enabled Networks
Need to Effectively Manage
Organizational Interdependence
Need to Increase Organizational
Performance
Competitive Business
Environment
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
4
Move to Networked Organizations
IT-Enabled Networks
Need to Effectively Manage
Organizational Interdependence
Need to Increase Organizational
Performance
Competitive Business
Environment
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
• Global marketplace
• New and powerful
strategies of
globalization
• Advances and
diffusion of IT into
businesses
5
Move to Networked Organizations
IT-Enabled Networks
Need to Effectively Manage
Organizational Interdependence
Need to Increase Organizational
Performance
Competitive Business
Environment
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
• Compressed time to
market
• Organizational
service to the
customer
• Product and process
quality
• Managing risk:
obsolesce,
inadequacy,
misunderstanding
• Managing costs
• Partnerships with
other organizations
6
Move to Networked Organizations
IT-Enabled Networks
Need to Effectively Manage
Organizational Interdependence
Need to Increase Organizational
Performance
• Improve
coordination and
cooperation
• Shared decision
making
• Moving from silos
to enterprise
Competitive Business
Environment
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
7
Move to Networked Organizations
IT-Enabled Networks
Need to Effectively Manage
Organizational Interdependence
Need to Increase Organizational
Performance
Competitive Business
Environment
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
• Integration to
coordinate across
functional
boundaries, yet
along organizational
structure
• Management’s
reach to all levels of
the organization
• Exchange of
information
8
Leveraging IT
Business
IT
Alignment
Vision
Strategy Business networks
Strategy
(Competitive Advantage)
Process Reengineering
(Control, enhancing, leveraging)
Capabilities
Capabilities IT infrastructure
Alignment
Value
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
9
Business Opportunities and Market
Potentials
• By 2008, half of the US population (approx. 250 million)
will purchase its goods and services online through the
Internet (vs. 30 percent in 2004)
• Estimated spending per buyer will average $780
(vs. $585 in 2004)
• Translates to $117 billion in retail sales
• B2C e-business poses several new challenges
– Trend toward selling micro-segmented, tailored
products and services
– Requires businesses to establish and build closer
learning relationships with their customers
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
10
Investments
For example…
• Worldwide investments in CRM technology (software and
technology services) in 2002 estimated at USD$2.3
billion
– Investments were predicted to quadruple to $10.8
billion in 2004
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
11
Emerging IT Strategic Role
IT offers the capability to redefine the boundaries of
markets and structural characteristics, alter the
fundamental rules and basis of competition, define
business scope, and provide a new set of competitive
weapons.
N. Venkatraman, 1991
(from Corporations of the 1990s)
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
12
New technologies open new opportunities
How does a business benefit from new technologies?
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
13
MIT90 Framework
Five Inter-Related Components
Structure
Vision and
direction
Strategy
Organization and coordination
Planning and control
Management
Processes
Individuals
and Roles
Information
Technology
Technology
Human resources
Dynamic Equilibrium: Any change to a component requires an
adjustment to the others
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
14
Architecture vs. Infrastructure
• Architecture – a blueprint that shows interrelationships
of the components of a system
– Emphasis on the whats
– Based on the business model
• IT Infrastructure – implementation of the architecture
Purpose: To deliver the right information to the right
people at the right time
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
15
Architecture
• Defines guidelines and standards
• Service Oriented Architecture (SOA)
– Emphases on accessibility of others systems to data
and functions, and reusability of programming code
– Supports the organization's agility
• Four attributes: Distributed vs. Centralized
– Location of processing
– Connectivity among processors
– Location of data repository (data storage)
– Systemwide rules (information security, accessibility,
etc.)
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
16
IT Architecture
Another View
Coordination
(information flow
and linkages)
Control
• “…defines the technical computing, information
management, and communications platform. …provides
an overall picture of the range of technical options
available to a firm, and as such, it also implies the range
of business options.”
Enables
Opportunities
Vision
What design gives the organization the best use of its information?
What technology configurations will best support the business?
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
17
Infrastructure
Delivering the right information to the right people at the right time
• Delivering IT resources to support users throughout the
organization
• Four layer infrastructure (Weill and Broadbent)
– IT components
– Human IT infrastructure
– Shared IT services – services that users can draw
upon and share to conduct business
– Shared and standard IT applications – stable
applications that change less frequently
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
18
IT Infrastructure
• Three categories:
– Network – technologies that permit exchange of
information between processing units and
organizations
– Processing systems – encompass hardware and
software that provide an organization’s ability to
handle business transactions
– Facilities – physical systems that house and protecting
computing and network devices
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
19
IT Infrastructure: Network
• Management issues:
– Selecting technologies and standards
– Selecting partners and managing their relationships
– Assuring reliability
– Maintaining security
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
20
IT Infrastructure: Network
• Technological Elements:
– Local area networks (LANs)
– Hubs, switches, wireless access points and network
adapters
– Wide area networks (WANs)
– Routers
– Firewalls and other security systems and devices
– Caching, content acceleration and other specialized
network devices
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
21
IT Infrastructure: Processing Systems
• Management issues:
– Deciding what to keep in-house vs. out-sourced
– Deploying, growing an modifying
– Enterprise system vs. best of breed hybrid
– Managing incidents
– Recovering from disasters
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
22
IT Infrastructure: Processing Systems
• Technological elements:
– Client devices and systems
– Server devices and systems
– Mainframe devices and systems
– Middleware
– Infrastructure management systems
– Business applications
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
23
IT Infrastructure: Facilities
• Management issues:
– Governance: Internal vs. external management
– Aligning the facilities and business models
– Assuring reliability
– Maintaining security
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
24
IT Infrastructure: Facilities
• Technological elements:
– Building and physical spaces
– Network conduits and connections
– Power
– Environmental controls
– Security
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
25
Potential Benefits of a Real-time
Infrastructure
• Better data, better decisions – synchronizing data to
ensure their quality and reliability
– Consistency throughout the enterprise
• Improved process visibility – open standards, open
interconnectivity between business partners
• Improved process efficiency – enhanced process visibility
and quicker response to changes in the environment
• Sense and respond – sensing actual events (e.g.,
customer demand) vs. forecasting outcomes
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
26
Infrastructure: Another View
• IT infrastructure as a strategic resource
– Types of infrastructures
• Independent - without regard to strategies
• Reactive - development in reaction to a particular
thrust
• Interdependent - coalignment with the strategic
context
– Modifications to the IT infrastructure signal
implications for possible changes and
improvements in strategy, while modifications
to strategic thrusts trigger appropriate changes
in the IT infrastructure
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
27
Five Levels of IT-Induced Reconfigurations
Greater degree of business transformation
Greater range of potential benefits
Radical
Business Process
Redesign
Business Network
Redesign
Business Scope
Redefinition
Maximum exploitation of available IT capabilities
Alignment between technology and the organization
Internal Integration
Evolutionary
Local exploitation
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
28
1. Local Exploitation
• Exploitation of IT within a business function
– Development of applications that improve task
efficiency
– Target functional-specific goals without influencing
related areas of operations
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
29
Local Exploitation
Managerial implications
• Identification of high-leverage activities
– Effective systems must be within the context of
competitive and organizational conditions, and
strategic thrusts
• Rejection of generic strategic information systems
– Specifically designed systems that provide maximal
benefits
• Recognition of the scope of transformation
– Other areas of operation should be aware of the
localized system benefits
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
30
Enablers and Inhibitors
Enablers
Technological
•Favorable costperformance trends
•Vendor push system solutions
Organizational
•Localized impact
•Ease of assessing
efficiency benefits
•Minimal
disturbance to
operations
Local
Exploitation
IT-Induced
Reconfiguration
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Inhibitors
Technological
•Obsolescence
•Further reduction
in costperformance
Organizational
•Lack of strategic
vision
•Unwillingness to
recognize the
strategic role of IT
and IS
31
2. Internal Integration
The deployment of a common IT platform serves to
integrate the organization’s business processes,
potentially enhancing efficiency and effectiveness
• IT capabilities are exploited in all the possible activities
within the business process
– Technical integration
• Integrating systems and applications using a
common IT platform
– Organizational integration
• Integration of roles and responsibilities that
exploits the technical integration capabilities
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
32
Internal Integration
Benefits
• Efficiency
– Compression of time and distance leading to cost
savings
• Effectiveness
– Opportunities to develop new competitive weapons or
value-added services
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
33
Internal Integration
Managerial Implications
• Articulation of the logic and rationale for internal
integration
– Serves as the basis for developing detailed
technological and organizational decisions to achieve
integration
• Recognition of the dynamics of integration
– Constant review and reassessment of the business
integration requirements through the IT platform are
necessary as business conditions and technological
developments evolve over time
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
34
Enablers and Inhibitors
Enablers
Technological
•Increasing
connectivity
•Favorable costperformance trends
•Vendor pushsystem solutions
Organizational
•Strategic vision for
integration
•Centrality of IT to
the strategic
context
Internal
Integration
IT-Induced
Reconfiguration
Idiosyncratic
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Inhibitors
Technological
•Uncertainty
•Integration costs
Organizational
•Lack of strategic
vision
•Organizational
inertia and
resistance to
change
•Centralizationdecentralization
conflict
35
3. Business Process Redesign
Revolutionary changes in the design of organizational
processes are necessary to best exploit the emerging
technological capabilities
• Reconfiguration of the business using IT as a central
lever
– Business processes are redesigned to maximally
exploit the available IT capabilities
• Redesign of relevant processes
– Respecification of organizational roles, reporting
relationships, and managerial responsibilities
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
36
Business Process Redesign
Managerial Implications
• Recognition of the nature and impact of business
process redesign
– Recognizing and understanding the scope and impact
of potential IT-enabled process redesign
• The role of strategy in business process redesign
– Balance between technological and organizational
capabilities
– Dependent on the goals and strategies of the
organization
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
37
Enablers and Inhibitors
Enablers
Technological
•Favorable costperformance trends
Organizational
•Awareness of the
power of IT
•Willingness to
make quantum
changes
Marketplace
•Competitive
pressure
Business
Process
Redesign
IT-Induced
Reconfiguration
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Inhibitors
Technological
•Uncertainty
•Redesign costs
Organizational
•Lack of strategic
vision
•Organizational
inertia and
resistance to
change
•Cost of
transforming the
organization
38
4. Business Network Redesign
Electronic Integration
Redesigning the nature of exchange among multiple
participants in a business network through electronic
integration
• Reconfiguration of the scope and tasks of the
business network involved in the creation and
delivery of products and services
– Includes business tasks within and outside the
organization
– Electronic integration across key partners becomes
the dominant strategy
• Business issues involving the relative authority
and responsibilities of the participants
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
39
Strategic Options
• Strategies for business governance
– Relationships with key participants
• Loose vs. tight
• Depends on the partnership and what is expected
from it
• Strategies for IT governance
– Govern IT network across all participants
• Common vs. unique role
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
40
Strategic Options
Business governance
Tight
Loose
Collaborative
advantage
Business network
redesign
Improved efficiency
Electronic integration
Electronic
infrastructure
Competitive
advantage
No strategic advantage
Short-term advantage
Common
IT governance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Unique
41
Electronic Integration
A quasi-firm or a quasi-market mechanism that is
fundamentally designed and operated through the
capabilities offered by IT
• Emerging roles
– Transactions - supports the exchange of data
– Inventory - provides a means for determining status
and triggering events (movement of goods)
– Process - manages and coordinates processes over all
parties
– Expertise - provides intellectual support
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
42
Business Network Redesign
Benefits
• Operational efficiency
– Savings in operating costs and time
• Market positioning
– Benefits gained by occupying certain positions in the
marketplace
• Partnership conditions
– Scope of the business network in terms of the
characteristics of the partners
• Strategic capabilities
– Extent to which innovative mechanisms can be
deployed in each role
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
43
Business Network Redesign
Managerial implications
• Conceptualizing strategies for electronic integration in
terms of the intersection of three key decisions
– Business governance decisions
– IT governance decisions
– Scope of integration
• Conceptualizing organizational boundary in virtual terms
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
44
Enablers and Inhibitors
Enablers
•Ability to specify
and/or create
standards for
integration
•Identification of
the value-added
service
Business
Network
Redesign
IT-Induced
Reconfiguration
•Recognition of
mutual benefits
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Inhibitors
•Lack of standards
•Lack of vision and
understanding
•Lack of
commitment to
integration
•Possible erosion
of market positions
45
5. Business Scope Redefined
• Explicate the logic underlying the portfolio of businesses
• Identify differential strategic thrusts
• Develop criteria for allocation of scarce resources among
the businesses
• Redefinition issues
– Enlarging the business mission and scope
– Shifting the business scope
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
46
Business Scope Redefined
• Enlarging the business scope
– Selling information as a new product
– Offering value-added services related to the original
business
• Shifting the business scope
– Redirecting core scope due to advances in technology
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
47
Management Challenge Issues
• IT infrastructure as a strategic resource
– Types of infrastructures
• Independent - without regard to strategies
• Reactive - development in reaction to a
particular thrust
• Interdependent - coalignment with the strategic
context
– Modifications to the IT infrastructure signal
implications for possible changes and
improvements in strategy, while
modifications to strategic thrusts trigger
appropriate changes in the IT infrastructure
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
48
Adoption IT
Assimilating Emerging Technologies
• Technology identification and investment
– High impact, high profile
• Technological learning and adaptation (light fires)
– Introducing IT to end-user computing
– Innovation
• Realization management control (formalization)
– Controls for the effective use and diffusion of IT
• Maturity/widespread technology transfer
– Sustained application and introduction of IT
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
49
Assimilating Emerging Technologies
Phase 1 - Infusion
• Introduction of new IT
Phase 2 - Diffusion
• Expansion throughout
the organization
Phase 3 - Policy
Phase 4 - Acceptance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
• Setting policy of IT’s use
(application)
• Maturation and further
assimilation
50
Assimilating Emerging Technologies
Phase 1 - Infusion
Phase 2 - Diffusion
Phase 3 - Policy
Technology identification
• Decision to invest in new
IT
• Complementary project
implementations with high
investment and benefits
uncertainty
Phase 4 - Acceptance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
51
Assimilating Emerging Technologies
Phase 1 - Infusion
Phase 2 - Diffusion
Phase 3 - Policy
Technological learning and
adaptation
• Apply new technology to
new tasks
Phase 4 - Acceptance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
52
Assimilating Emerging Technologies
Phase 1 - Infusion
Phase 2 - Diffusion
Phase 3 - Policy
Phase 4 - Acceptance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Rationalization/
Management Control
• Control for guiding the
design and
implementation of
systems (i.e.,
institutionalizing)
53
Assimilating Emerging Technologies
Phase 1 - Infusion
Phase 2 - Diffusion
Phase 3 - Policy
Phase 4 - Acceptance
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
Maturity/Widespread
Technology Transfer
• Technology embraced
throughout the
organization
• New technologies
emerge
54
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
55
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
56
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
57
R. Ching, Ph.D. • MIS Area • California State University, Sacramento
58